The U.S. manufacturing sector contracted in July but at a slower rate than in June, according to the Institute for Supply Management's key purchasing managers' index for manufacturing released today.

The index reading for July reached 48.9, the highest reading since August 2008. However, only readings of more than 50 indicate expansion.

"Overall, it would be difficult to convince many manufacturers that we are on the brink of recovery, but the data suggests that we will see growth in the third quarter if the trend continues," said Norbert Ore, chair of the institute's manufacturing business survey committee.