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America's manufacturing sector has contracted for the first time in almost three years, raising fears that the world's major economic centers could suffer a simultaneous slowdown. According to The Telegraph, an index of manufacturing activity unexpectedly fell to 49.7 in June from 53.5 in May, the Institute for Supply Management (ISM) said. The Dow Jones and the Standard & Poor's 500 Index (S&P 500) both fell as investors took the report as further confirmation that the world's largest economy is losing the momentum it enjoyed at the start of the year. "It's a really terrible number," said David Semmens, an economist at Standard Chartered. The ISM survey said that the overseas demand for US manufactured goods has also gone down. Although manufacturing accounts for just 10 percent of GDP, the sector has been one of the brightest parts of the economy since America emerged from recession in the middle of 2009. It is also the part of the US economy where the effects of Europe 's recession and a slowing in Asian growth are most likely to show up first. "We are particularly concerned about the drop in the ISM because it likely reflects a pullback by business as the eurozone falls into a deeper recession," said Joshua Dennerlein, an economist at Bank of America. "The manufacturing sector is particularly vulnerable to the slowdown in global activity," he added. A plunge in the ISM report a year ago fuelled anxiety that the US was at risk of sliding back into recession.

US manufacturing sector's contraction raises fear of global slowdown