U.S. manufacturing contracted last month for the first time since February, as new orders and output plummeted and factories cut jobs.

The Institute for Supply Management says its manufacturing index dropped to 49.4 in August from 52.6 in July. Any reading below 50 signals contraction.

The report suggests that manufacturers continue to struggle as businesses spend less on machinery, computers and other large equipment. Auto sales have also leveled off this year after reaching a record level in 2015.

A measure of employment fell to 48.3, its second straight month of decline. That is a sign manufacturers are laying off workers.

Orders for new goods fell to the lowest level since December. And a gauge of production plunged to the lowest level in four years.