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U.S. Manufacturing Growth Slows To Lowest Level In Two Years

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NEW YORK - The pace of growth in the U.S. manufacturing sector ticked down to a crawl in August, faring better than economists had forecast but remaining at the lowest level in two years, an industry report showed on Thursday.

The Institute for Supply Management said its index of national factory activity edged down to 50.6 from 50.9 in July.

A reading above 50 indicates expansion in the manufacturing sector. Analysts had been expecting the index to fall to 48.5 to show the first contraction since July 2009, just after the recession officially ended. Still, the index remained at its lowest level since July 2009.

U.S. manufacturing growth has slowed since the first months of the year, though the national indicator has held up better than some regional surveys. While there has been a flare-up in concern that the economy could be headed for another recession, recent data has suggested more of a slow growth scenario.

U.S. stocks <.SPX> turned positive immediately after the data, but later turned negative, while Treasuries prices hit session lows before paring losses. The euro pared losses against the dollar, but later fell nearly 1 percent.

Inventories rose to 52.3 from 49.3, but new orders rose only a hair to 49.6 from 49.2. The employment gauge slipped to its lowest level since November 2009 at 51.8 from 53.5.

"The headline was resilient and we are pleased to see that, but if you look at the breakdown it is much less positive. New orders remain below 50 so that is not a good forward-looking indicator," said Sean Incremona, economist at 4Cast Ltd in New York.

Earlier data showed factory activity stalled worldwide last month as new orders tumbled.

(Reporting by Leah Schnurr; Editing by James Dalgleish)

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