US factory activity shrinks for first time in 6 months

WASHINGTON (AP) — U.S. manufacturing contracted last month for the first time since February, as new orders and output plummeted and factories cut jobs.

The Institute for Supply Management said Thursday that its manufacturing index dropped to 49.4 in August from 52.6 in July.

"The decline is hard to square with the signals coming from the timelier regional surveys," Steve Murphy, U.S. economist for Capital Economics, said in a research note.

Orders for long-lasting manufactured goods, which includes industrial equipment, cars and appliances, also increased in July, the Commerce Department said.

A category of orders that excludes volatile items such as aircraft and tracks business investment rose by the most in six months.