U.S. factory activity fell last month, as the stronger dollar and low oil prices are cutting new orders and hurting production.

The Institute for Supply Management says its index of factory activity in November dropped to 48.6 from 50.1 in October. Any reading below 50 signals contraction and the index has tumbled below that critical level for the first time since November 2012.

A measure for new orders dropped to 48.9 from 52.9, while production fell to 49.2 from 52.9. Still, the report showed a rebound in hiring as its employment measure improved to 51.3 from 47.6 in the prior month.

U.S. manufacturers have been squeezed this year as a strong dollar and weak economies in China and other key foreign markets have cut into exports