US manufacturing at two-year low

EARLY gains in the US markets were reversed yesterday after poor manufacturing data put the spotlight firmly back on the faltering US economy.

The Institute for Supply Management (ISM) reported the slowest growth in US manufacturing in two years, with new orders falling to their lowest level since June 2009.

US stocks swung from a one per cent gain at the open to a one per cent slide mid-afternoon, but losses pared later on renewed hopes that the debt ceiling deal was nearing approval.

The headline index fell to 50.9, and the forward-looking new orders index dropped to below 50, though the ISM said this could be down to companies putting off decisions until the debt ceiling deal had been reached.