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U.S. manufacturing sector shrank for second month

WASHINGTON – U.S. manufacturing shrank for the second straight month in July, a worrying sign that growth is faltering.

The Institute for Supply Management, a trade group of purchasing managers, says its index of manufacturing activity ticked up to 49.8, from 49.7 in June.

A reading below 50 indicates contraction. June was the first time manufacturing contracted in three years.

Factories have been a key source of jobs and growth since the recession ended in June 2009. But the sector has shown signs of weakness in recent months.

The report showed factories kept hiring in July but at a slower pace. And new orders declined more slowly than in June.

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