U.S. Factory Activity Contracts for First Time Since 2012

The U.S. manufacturing sector contracted in November, falling to its worst levels since June 2009, when the economy was still in the midst of a recession, according to an industry report released on Tuesday.

The Institute for Supply Management (ISM) said its index of national factory activity fell to 48.6, the first time the index has been below 50 since November 2012, after reading 50.1 in October. The reading was for expectations of 50.5, according to a Reuters poll of 77 economists.

A reading below 50 indicates contraction in the manufacturing sector; the ISM data is often viewed as a precursor to movement in the overall economy, though its contribution to U.S. economic activity has been in decline for decades. The ISM index fell below 50 in 2012 briefly, but the economy did not go into recession.

The employment index rose to 51.3 from 47.6 a month earlier, its highest reading since July. Expectations called for a reading of 48.4.

The new orders gauge fell to 48.9, lowest since August 2012. The prices paid index fell to 35.5 from 39, compared to expectations of 40.