The Institute for Supply Management’s (ISM) manufacturing index came in at 48% last month, down from 49% in June and remaining below the 50% reading that would indicate the sector is expanding.

Declines in the supplier deliveries and employment indexes were the biggest factors behind the drop, ISM survey chair Susan Spence said in the report.

The index for new orders contracted at a slower rate, while there were quicker supplier deliveries “as supply chain performance improved and sluggish demand continued”, the report said.

“The employment index dropped further into contraction as panelists indicated that managing head count is still the norm at their companies, as opposed to hiring,” it added.

A respondent in the apparel sector said: “These tariff wars are beginning to wear us out. It’s been very difficult to forecast what we will pay in duties and calculate any cost savings we’ve had this year.”

Another respondent, in the machinery industry, said: “Currently, higher interest rates still depress the construction industry for new construction projects.”