Economic activity in the manufacturing sector contracted in August following five consecutive months of expansion, according to the Institute for Supply Management’s purchasing managers index for US manufacturing released today. August’s index reading was 49.4, down from July’s reading of 52.6%. Readings below 50.0, generally, indicate contracting.

The employment portion of the index fell to a reading of 48.3 in August from 49.4 in July.

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

Separately, the US Department of Labor reported the US four-week moving average of initial claims for unemployment insurance edged down to 263,000 last week, a decline of 1,000 from the previous week’s unrevised average, according to seasonally adjusted numbers released today.

The four-week moving average decreases the volatility of the weekly numbers. Total initial claims for unemployment insurance for the week ended Aug. 27 were 263,000, up 2,000 from the previous week’s unrevised level.

This marks 78 consecutive weeks of initial claims below 300,000, the longest streak since 1970.

No special factors affected this week’s initial claims.

Bloomberg reported fewer Americans than forecast filed applications for unemployment benefits last week, further evidence of a healthy labor market. Hiring managers are hesitant to pare workforces as a tighter labor market puts a premium on skilled and experienced employees.