Baton Rouge is the most cost-friendly city to do business in, and New Orleans is second, among the 18 midsized U.S. metro areas with populations between 750,000 and 2 million, according to a new report from financial services firm KPMG LLP.

Baton Rouge’s business costs were 7.2 percent lower than the national baseline, thanks to favorable costs for industrial facility construction, property taxes, natural gas, electricity and labor, according to KPMG’s 2016 Competitive Alternatives study.

New Orleans’ business costs were 6.9 percent lower than the national benchmark.

Although it had higher labor, electricity and property tax costs than Baton Rouge, New Orleans has the lowest effective corporate income tax rate among the group of midsized cities in the study, as well as low costs for transportation and office space.

“I think that the importance of these rankings is that they both validate the new reality of doing business in Louisiana and they help change the perception of Louisiana to the outside world,” said Michael Hecht, president and CEO of Greater New Orleans Inc.

The KPMG report is the latest in a series of positive business-related rankings for Louisiana.

The most dramatic change is probably that of Chief Executive magazine, he said. In 2008, Louisiana ranked 47th among the 50 states for business.

The only states chief executives liked less were California, New York and Illinois. This year, Louisiana ranked seventh-best in the magazine’s rankings.

“That would seem to indicate in some way … that the cumulative impact of CEOs seeing these articles and seeing these rankings is changing their perception of Louisiana,” Hecht said.

Another indicator of that is the rankings of magazines like Site Selection, Location Matters and Global Trade, Hecht said.

Louisiana recently has garnered some of its highest rankings in those publications.

Baton Rouge Mayor-President Kip Holden said the KPMG rankings demonstrate that others recognize the hard work of businesses, residents, Holden’s administration and public officials in Baton Rouge.

Follow Ted Griggs on Twitter, @tedgriggsbr