US manufacturing shrinks in August

US manufacturing contracted for a third straight month in August, with a key sector index hitting its lowest level since July 2009. The Institute for Supply Management said its PMI index of manufacturing stood at 49.6 percent in August, falling from 49.8 the prior month, below the 50 line above which the sector is expanding. "Comments from the panel generally reflect a slowdown in orders and demand, with continuing concern over the uncertain state of global economies," the ISM said. Manufacturers reported prices were on the rebound after contracting for several months, but new orders continued to slide along with inventories. "Business is slow right now. Companies seem to be holding onto their money," one person from the computer and electronics business told ISM. "We can sense, feel and see headwinds with customer orders, especially Europe-related," said another respondent, from the apparel sector. While smaller than the powerful services sector, manufacturing has been an important driver in rebuilding the US economy since the 2008-2009 recession.