U.S. Manufacturing Contracted In August

A closely watched gauge of U.S. factories showed activity contracted in August, reflecting the mixed fortunes of American manufacturers amid a strong dollar, slow global growth and an uncertain outlook at home.

The Institute for Supply Management on Thursday said its index of manufacturing activity decreased to 49.4 in August from 52.6 in July. A reading above 50 indicates that factory activity is growing while a reading under 50 signals contraction.

Economists surveyed by The Wall Street Journal had expected an August reading of 52.0.

Write to Jeffrey Sparshott at jeffrey.sparshott@wsj.com