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US manufacturing activity is slowing, as rising prices have made materials more expensive. The sector has declined for the first time since September 2009, according to IHS Markit.
The index of purchasing managers in the Markit flash manufacturing sector for August fell just below 50, indicating a contraction. This was a minimum of 119 months for the index. A number less than 50 means that a sector is in contraction, while a number greater than 50 indicates growth.
The drop in August was due to weak new orders, which offset slightly faster production, according to Markit. Manufacturing output reached a two-month high, 50.6.
"Data from the August survey clearly indicate that economic growth continued to slow in the third quarter," said Tim Moore, deputy director of economic relations at IHS Markit.
The PMI data are based on a survey of companies, which showed that confidence for the coming year had dropped for the seventh consecutive month and was at its lowest level since July 2012.
The manufacturing sector was affected by the trade war between the United States and China, which weighed on global demand. This has dampened global growth and hurt export sales, Moore said.
But "the most worrying aspect" of the latest data is the slowdown in new business growth, which has fallen to its lowest level in a decade, Moore said. Growth slowed due to a sharp slowdown in the services sector.
Services activity also slowed in August, but remains growing. The composite PMI index stood at 50.9, the lowest level in three months.
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