U.S. factory activity contracted for the second straight month in September and hit a 10-year low, triggering fresh concerns about the economy and a broad stock-market decline.
The U.S. manufacturing readings were among several data points released Tuesday pointing towards the global impact of the U.S.-China trade war, as trade flows are set to grow this year at the weakest pace since the financial crisis, with rising tariffs and cooling growth.
The Institute for Supply Management reported its manufacturing index fell to 47.8 in September, the lowest level since June 2009, from 49.1 the prior month. Readings below 50 indicate contraction, while those above signify expansion. The August result marked the first drop in three years.
U.S. stock indexes fell after release of the data, with the S&P 500 losing more than 1% in afternoon trading.
“Thank the trade war, which means no improvement is likely anytime soon,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, said in a note to clients, referring to the ISM reading, which is based on a survey of U.S. purchasing and supply executives.