The Institute for Supply Management said in its monthly survey the index measuring domestic factory activity fell to 48.1last month from 48.3 in October amid weakness in new orders and exports.  The data helped push stocks in the US and Europe towards their biggest one-day drop in almost two months, as investors were also unnerved by weak EU factory data and Donald Trump’s decision to reimpose metals tariffs on Brazil and Argentina.

It was the fourth consecutive month of contraction for the US manufacturing sector, though it remains in a stronger position than in September when the index was at its worst level in a decade. Economists expected it to hit 49.2 last month, according to a Thomson Reuters poll. A reading below 50 indicates contraction.

Timothy Fiore, chair of ISM’s manufacturing business survey committee, said sentiment improved month-to-month but is neutral regarding near-term growth. “Global trade remains the most significant cross-industry issue,” Mr Fiore said. Also on Monday, the Census Bureau said construction spending in October fell o.8 per cent compared with September levels, an unexpected fall against economists’ forecast for a 0-4 per cent increase.

Stocks sold off while bond prices rose, sending yields lower, in reaction to the glum data. The S&P 500 was down o.8 per cent, and the tech-heavy Nasdaq Composite fell 1.2 per cent. The yield on the 10-year Treasury yield was up 5.2 basis points at 1.8276, below its highs for the day. The US dollar index dropped 0-4 percent.

US manufacturers have come under pressure amid slower economic growth globally, while prolonged trade negotiations between the US and China have weighed on business confidence.