Dec. 3, 2012 at 10:11 AM ET
U.S. manufacturing unexpectedly contracted in November, falling to its lowest in over three years in a sign the sector may be struggling to gain traction, according to an industry report released on Monday.
The Institute for Supply Management (ISM) said its index of national factory activity fell to 49.5 in November from 51.7 the month before. The reading was shy of expectations of 51.3, according to a Reuters poll of economists.
A reading below 50 indicates contraction in the manufacturing sector, while a number above 50 means expansion.
"It is a surprise. It was expected to be down but only a little bit," said Christopher Low, chief economist at FTN Financial.
"There are two ways of looking at this -- we had two months of growth and now we are back to contraction, that is one way. The other, which is a little more realistic is that since May the index has been very close to 50 and I think what we are seeing is that manufacturing has stalled and has yet to recover," Low said.
The index hit its lowest since July 2009 and contracted after two straight months of growth that followed a soft period over the summer months.
The employment index fell to 48.4, and was below 50 for the first time since September 2009.
New orders fell to 50.3 from 54.2 and were at their lowest since August. Prices paid were down to 52.5 from 55.0, compared to an expected 53.0.
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