U.S. Manufacturing Contracts For First Time In Three Years

U.S. manufacturing contracted in August for the first time in three years.

The manufacturing pullback is being taken as a sign that the ongoing trade war with China is impacting a major part of the U.S. economy. The Institute for Supply Management — which represents purchasing managers at major industrial firms — said Tuesday its manufacturing index fell to 49.1 last month. That's down from 51.2 in July. Any reading below 50 implies more companies are getting smaller than getting bigger.

Manufacturing makes up 11% of the U.S. economy, so a slowdown at companies that build things is likely not enough alone to tip the economy into recession. But analysts say it's another reason for concern about the American economy.

TD Bank noted that the ISM's employment sub-index fared even worse, down four points to 47.4. That implies that there are more U.S. manufacturers that plan on laying off workers than hiring them.