Activity in US manufacturing contracted in August, but the rate of contraction slowed compared to July, according to the Institute for Supply Management. The report also indicated a continued slowdown in manufacturing hiring.

The Manufacturing PMI, or purchasing managers composite index, rose to 47.6% in August from 46.4% in July. Only readings above 50% indicate expansion.

August marked the 10^th consecutive month of contraction in the Manufacturing PMI.

“The US manufacturing sector shrank again, but the uptick in the PMI indicates a slower rate of contraction,” Timothy Fiore, chair of the ISM’s Manufacturing Business Survey Committee, said in a press release. “The August composite index reading reflects companies managing outputs appropriately as order softness continues, but the month-over-month increase is a sign of improvement.”

The employment index portion of the composite index ticked up to a reading of 48.5% from a reading of 44.4% in the prior month. That still indicates contraction, but as with the overall Manufacturing PMI, the rate of contraction eased.

“Labor management sentiment at Business Survey Committee respondents’ companies continue to indicate a slowdown in hiring, reflected by attrition, freezes and layoffs,” Fiore said. “In August, attrition was the primary source of head-count reductions; this method is slower compared to hiring freezes or layoffs, which suggests that panelists’ companies are not driven by reducing labor costs.”

The ISM noted that two industries indicated unemployment growth — machinery and transportation equipment. The rest of the 18 manufacturing industries covered either saw a decline or no change in employment in August.

The ISM’s Manufacturing PMI report is based on data from purchasing and supply executives across the US.