Manufacturing sector shrinks for the first time in almost a decade

The growth of US manufacturers slowed to its lowest level in almost 10 years in August, the latest sign that the trade war could exacerbate the economic slowdown.

The US Manufacturing PMI (PMI) was 49.9 in August, down from 50.4 in July and below the 50.0 mark for the first time since September 2009, according to IHS Markit .

Any reading below 50 indicates a contraction.

"Manufacturing companies have continued to feel the effects of slowing global economic conditions," said Tim Moore, deputy director of economics at Markit, in a statement released Thursday. "The August survey data provides a clear signal that economic growth has continued to slow in the third quarter."

The manufacturing sector had been one of the big winners of the Trump administration, but unpaid customs duties in the US-China trade war have severely shaken the sector. According to data from the Institute for Supply Management, manufacturing activity in the United States slowed in July to reach its lowest level in nearly three years in July.

But this new survey shows that new orders received by manufacturers registered the largest decline in 10 years, while the data also show that export sales have fallen to the lowest since August 2009.

"The most worrying aspect of the latest data is the slowdown in new business growth, which has reached its lowest point in a decade, driven by a sharp slowdown in the services sector," he said. Mr. Moore. "Interviewees said the slowdown in business spending was being held back by lowering growth expectations, both domestically and internationally, which prompted a tighter budget."

Manufacturers continued to reduce inventories this month, which mainly contributed to concerns about demand prospects, according to Markit.

The overall growth of US business also reached its lowest level in three months, the IMI Markit Flash index, seasonally adjusted and seasonally adjusted, dropped to 50.9 in August, a sign of a " further slowdown "of the growth of US private sector activity, said Markit.