“The manufacturing recovery is at least temporarily out of steam,” said Nigel Gault, chief U.S. economist at IHS Global Insight.
An index of manufacturing activity fell slightly to 49.6 last month, down from 49.8 in July. It's the lowest level in three years, and the first time the index has stayed below 50 for three straight months since July 2009.
A reading below 50 indicates contraction, while a drop to about 43 indicates the overall economy is in recession, according to the institute.
Paul Dales, senior U.S. economist at Capital Economics, said the latest institute survey suggests the economy is growing at an annual rate between 1.5 percent and 2 percent in the July-September quarter. Growth at or below 2 percent isn't enough to significantly lower the unemployment rate, which was 8.3 percent in July.
The U.S. government will issue the August employment report on Friday.
CONTRIBUTING: Paul Monies, Business Writer