US manufacturing sector stalls as coronavirus outbreak hits supply chains

US manufacturing activity grew at the most tepid pace in six months in February as the supply chain disruptions arising from the coronavirus outbreak dragged on output and new orders, a survey of purchasing managers showed on Monday.

The final reading of the IHS Markit US Manufacturing Purchasing Managers' Index slid to 50.7 last month from 51.9 in January.

The data was slightly weaker than the preliminary - or "flash" - reading of 50.8 reported in mid-February and was the lowest reading since August.

A reading above 50 signals expansion in the sector.

"Manufacturing production and order book trends deteriorated markedly in February as producers struggled against the double headwinds of falling export sales and supply chain delays, both in turn often linked to the coronavirus outbreak," Chris Williamson, Chief Business Economist at IHS Markit said in a statement.

"Historical comparisons against official data indicate that the survey is consistent with factory production and orders both falling at annualized rates of around 3%, with manufacturing jobs being lost at a monthly rate of roughly 20,000." Williamson said companies are worried that the outbreak, which until now has largely delivered only a supply shock, could soon hurt demand and that the recent stock market volatility could hurt consumer spending and business investment. US stocks suffered their biggest weekly decline last week since the financial crisis, wiping out roughly $4 trillion in market value.

Markit will report its final reading on the services sector on Wednesday. In its flash report on Feb. 21, it said services activity had fallen to the lowest since October 2013 and that a sector accounting for roughly two-thirds of the US economy was in contraction for the first time since 2016.