Industry confidence has now been below the 100-level for 15 months in a row as manufacturers are concerned about the impact of the floods in many provinces that are affecting production and logistics, Mr Payungsak said.
They are also worried about the global and domestic economies and the continuing political conflict.
He said the fact the TISI is still below 100 shows there is low confidence in the industry sector overall.
Industry confidence for the next three months increased from 98.1 in August to stand at 100.5 on the expectation that orders, overall sales volume, production output and business performance would improve by the end of the year, the FTI chief said.
Risk factors that could hurt manufacturers' businesses over the next three months include political uncertainty and the possible fluctuation in foreign exchange rates. The impact of oil prices, global recession and high loan rates were of less concern for business operators in September, he said.
Mr Payungsak said the government should help find funding sources to provide low interest loans to help flood-affected manufacturers recover, and oversee the baht to prevent it from fluctuating too much.
In addition, the government should implement additional stimulus measures to boost domestic consumption and private investment, and keep fuel and electricity charges at suitable levels as they are key production costs.
Thanavath Phonvichai, director of the Economic and Business Forecasting Centre at the University of the Thai Chamber of Commerce (UTCC), said the centre has slashed its economic growth projection for Thailand in 2013 to 3.5% from 4.3%.
Mr Thanavath said the revision was made because the country is being affected by global recession, internal political conflict, labour shortages in the industry sector, high living costs, low prices for agricultural products, a slowdown in domestic consumption and the impact of current flooding.
He said the centre also lowered its 2013 export growth projection to 1.9% from 4.1%, with a total value of US$233.63 billion (7 trillion baht), and imports from 7.1% to 3.6%, with a total worth of $258.98 billion.
A trade deficit for the year is expected at US$25.34 billion. Inflation is projected at 2.3%, from the previous forecast of 2.5%, he added.
The damage caused by the floods in many provinces since Sept 17 is estimated at between 10 and 15 billion baht as business centres and roads to industrial estates were also inundated, he said.
Even though the industrial estates were not damaged as they were in 2011, the reports on the flooding had discouraged people from spending and this affected the production sector. The flooding would trim economic growth by 0.05%, he added.
The academic said the tourism sector would be the major force mobilising the economy this year. It is projected that the number of foreign tourists would rise by 18.3% from last year to 26.4 million, generating a total income of 1.15 trillion baht, up 19.9%.
He projected economic expansion for 2014 at 4.5-5.5%, with the highest probability at 5.1%. Export value is expected at $248.81 billion, up 6.5% from this year and imports at $279.70 billion, an increase of 8%.
Next year's trade deficit is projected at $30.87 billion, inflation at 3% and the average foreign exchange rate at 31 baht to the US dollar, he said.
Positive factors that will boost the economy in 2014 were the government’s investment in its 350 billion baht water resources and flood management projects and the two-trillion baht infrastructure development megaprojects, and the government’s policies to increase income for people and to stimulate domestic consumption.
Risk factors include political uncertainty, the fluctuation in foreign exchange rates, the problem of labour shortages, high production and living costs and concerns that the water and flood control projects and the infrastructure overhaul plans would not be implemented by 2014 as planned.