Factory activity shrank in February according to a report from the Institute for Supply Management (ISM).

Its index for national factory activity fell to 48.3 in February. A reading below 50 indicates that the manufacturing sector is contracting.

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That was the steepest fall in spending for 14 years.

Spending has been slashed on residential projects, but the latest report showed that there were cutbacks on commercial buildings such as hotels and highways.

The report also showed that December's decline was worse than the initial estimate, with the fall revised down to 1.3% from 1.1%.

While the report on manufacturing showed contraction, analysts thought the findings could have been worse.

"The (ISM) report was bad, but not as bad as expected. People thought we were going to go off a cliff, especially after last week's reports, " said Doug Roberts, chief investment strategist at Channel Capital Research.

(BBC)

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