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Survey: U.S. manufacturing sector contracted for first time since 2016

Manufacturing

Two closely-watched surveys on Tuesday showed a bigger-than-expected slowdown in the U.S. manufacturing sector in August — including one by the Institute for Supply Management that indicated the industry contracted for the first time since 2016.

Why it matters: The trade war, cited as a top concern among manufacturing firms, is viewed as a big factor driving the global economic slowdown. This is particularly true in the manufacturing sector, which has retreated significantly from its initial "Trump bump" after the election.

Details: The ISM survey's "purchasing managers’ index" had a reading of 49.1% last month, ending a 35-month period of expansion. Readings below 50% are considered contractions. Another survey by IHS Markit showed an index that reflects the health of the industry has slipped to its lowest level since 2009.

  • Amid fears that the U.S. may be on the brink of a recession, "manufacturing is likely to have again acted as a significant drag on the economy in the third quarter, dampening GDP growth," Chris Williamson, an economist at IHS Markit said in a release.

Go deeper: Manufacturing numbers around the world keep getting worse