ISM manufacturing falls back into contraction

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US manufacturing fell back into contraction in August.

The Institute of Supply Management's purchasing manager's index was 49.4, missing the estimate for 52, and down from 52.6 in July. 

It was the first time since February that the index read below 50, the border between expansion and contraction. 

A plunge in new orders led declines among all the measures that make up the index. Production, order backlogs, and employment also shrank. 

Earlier, Markit Economics' purchasing manager's index for August came in at 52, down from July and little changed compared to the consensus forecast. 

New orders rose at a more sluggish pace compared to July, causing a hiring slowdown. Meanwhile, production volumes increased at the quickest pace since November 2015.   

"Despite the PMI falling in August, the survey suggests the third quarter is shaping up to be the best quarter so far this year for manufacturing, with output growth picking up compared to the first half of the year on the back of improved export sales," said Chris Williamson, Markit's chief economist, in the release. 

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