The National Association of Purchasing Management reported Thursday its monthly index of business activity was at 49.4 percent last month, holding steady from its August level. Economists had predicted the index would reveal a more severe decline.
The reading marked the fourth straight month the measure was under 50 percent, a sign of contraction in the industrial sector.
In another economic report released Thursday, construction spending in the United States rose a tiny 0.1 percent in August, kept on the upswing mainly by government outlays as outlays for residential building flattened and commercial projects fell.
Overall construction spending inched up to a seasonally adjusted annual rate of $651.6 billion, the Commerce Department said.
That followed a similarly mild 0.1 percent increase in July, smaller than first reported, as residential building broke a record, but spending for commercial projects fell. In June, big spending increases were reported in all building sectors.
A construction boom this year has been fueled by unprecedented demand for new homes as plentiful jobs have boosted family incomes and mortgage rates have fallen to their lowest level in a generation.
Low interest rates on bank loans have also spurred commercial construction.
Analysts however, have been expecting building to slow as spreading global economic turmoil decreases demand for U.S.-manufactured products overseas and makes imports cheaper and more attractive to American consumers.