The Philadelphia Federal Reserve's manufacturing index fell to 12.0 in September after registering a reading of 16.8 in August.
Any reading above zero indicates improving conditions. Economists polled by MarketWatch expected a reading of 10.0.
The indexes for general activity and new orders fell, while the indexes for shipments and employment increased, the Philly Fed said.
The survey's future general activity index moderated but continues to suggest growth over the next six months.