US manufacturing activity slowed again in February, as global supply chains were hit by the coronavirus outbreak, according to an industry survey released Monday.

The slowdown meant activity was barely growing, according to the Institute for Supply Management (ISM), which showed its manufacturing index at 50.1 percent, down eight tenths from January. Any reading above 50 percent indicates manufacturing is growing.

While the institute described sentiment as "positive to cautious," respondents noted the virus was "front and center" and reported supply chain issues.

The manufacturing sector, which represents a small but symbolically important share of the world's largest economy, contracted in 2019 due to President Donald Trump's multi-front trade war, especially the damaging confrontation with China.

With a truce in the trade war, the epidemic has now become the main concern, since many global industries rely on products and parts produced in China.

"Tariffs have been overshadowed by the global coronavirus disruptions as the top issue on supply chain managers' agendas," said Timothy Fiore, chair of ISM's manufacturing survey.

Apple is one of many American businesses relying on China to supply parts and products, but manufacturers fear those supply chains could be disrupted by the coronavirus outbreak
Apple is one of many American businesses relying on China to supply parts and products, but manufacturers fear those supply chains could be disrupted by the coronavirus outbreak AFP / NICOLAS ASFOURI

Fiore told reporters that 42 percent of comments from survey respondents dealt with coronavirus, up from 2.5 percent in January, while 18 percent were experiencing issues in February, and "another 24 percent (expected) issues to develop in the following months."

Manufacturers worked to adjust to tariffs on key supplies during the trade war, Fiore said, and that know-how might help them survive the impact of the virus.

But economists say the tepid growth will not last.

"A last gasp above 50 before ISM Manufacturing likely heads into contractionary territory," Oxford Economics said in an analysis.

"New and old challenges make the near-term manufacturing outlook very gloomy," they said, adding, "These new headwinds come amid an already challenging backdrop of sluggish global growth."

The ISM survey showed the new orders index dropped 2.2 points to 49.8 percent, while imports plunged 8.7 points to 42.6 percent. Prices dropped more than seven points to 45.9 percent -- all in contraction.

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