The manufacturing sector shrinks for third straight month

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Production shrank at its sharpest clip in more than three years in August, the third month of contraction in a row, and companies hired the fewest workers since the end of 2009 a survey showed on Tuesday.

For supply management said, on that its index of national factory activity 49,6 in August fell Institute by 49,8 in July.

The reading fell shy of 50.0 average estimate in a Reuters poll of economists. A reading below 50 indicates contraction in the sector.

The index component employment fell its lowest level since November 2009 from 52,0 in July on 51,6.

"It is that the index of new orders again deteriorate without question a soft report on production and what is particularly worrying,", said Tom Porcelli, Chief U.S. economist for RBC capital markets. "It has become increasingly clear that the manufacturing sector is losing momentum." "This soft report payrolls leads in Friday will solidify when we see an other soft order report only additional measures the Fed."

New orders, a forward-looking sub-index fell to 47.1 in August, the worst result since April 2009. It amounted to 48 in July.

The exports index ticked up to 47 remained last month of 46.5 in July but in contraction, as recession in parts of Europe and slower growth in Asia to undermine demand U.S. were.

"Since everything we is international in terms of the demand by our label, a little slowdown expected tracks, especially with the euro zone still under pressure and emerging relatively experiencing growth, slowly", said Patrick O'Keefe, Director of economic research at j.j Cohn O'. "The domestic new orders for the production were a bit, but not robust so it is not unexpected somewhat more cautiously to see something."

Reuters contributed to this report.