The reading on the health of the manufacturing in and around Philadelphia demolished expectations, economists projected the reading to come in at 1.0.
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Meanwhile, the index for future business conditions was up 11 points to 34.5. Any reading below 50% indicates contraction, and the index was below that level for the first time since February.
New orders were strong, with the sub-index jumping from -7.2 to 1.4.
The current shipments index declined from 8.4 in August to -8.8 this month. Employment, however, remained weak.
Looking ahead, firms surveyed remain optimistic about business conditions over the next six months and were more upbeat about prospects for employment.
New orders declined in September after a slight advance in the previous month.
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The ISM factory index fell to 49.4% in August from 52.6% in the prior month, another sign of the difficulties in the factory sector. Almost 34% of the firms said they expected to expand employment over the next six months, while 9% expected to reduce employment.
