The business index for August fell from 19.8 to 9.3, with points calculated by finding the difference between the percentage of businesses reporting growth from the percentage reporting a contraction.
The Fed said the new orders index fell back 5 points to 5.3, remaining positive. The shipments index dropped 15 points to fall just below zero, its first negative reading in three months.
The survey, taken the first two weeks in August, found the index measuring the number of employees fell 4 points to 3.5.
The survey results showed nearly 53 percent of respondents indicated they believed business would pick up in the next six months. Despite that, indexes measuring expectations for new orders, increased shipments and larger payrolls all decreased in the month.