Economy Was Showing Strain Before Storm

By JENNIFER BAYOT

Rising energy prices were taking their toll on businesses and consumers even before Hurricane Katrina struck the Gulf Coast's oil rigs and refineries, industry surveys and government data showed yesterday.

Manufacturing was weakening in August, and consumers were going further into debt in July to maintain their spending, propping up retailers.

The Institute for Supply Management's manufacturing index was at 53.6 percent last month, down far more than expected and its lowest level since May.

"Business is extremely strong, but energy volatility is playing havoc with planning and pricing scenarios," the survey quoted a chemical industry supply manager as saying.