US ISM index in July reaches lowest level in two years

US manufacturers grew in August at their slowest pace in over two years, figures released on Tuesday showed.

The Institute for Supply Management revealed its manufacturing index declined from 52.7% to 51.1% in August, falling below the 52.2% reading analysts had expected.

The sub-index monitoring new orders fell 4.8 points to 51.7%, the lowest since May 2013, while the employment gauge edged 1.5 points lower to 51.2%.

"The export index lost 0.5 points to 46.5%, an indication of the tougher conditions faced by US firms that are exposed to foreign markets," said analysts at Barclays.

"The weaker-than-expected headline reading and broad-based softness in the August manufacturing ISM suggest that the goods-producing sector is likely to remain subdued in the third quarter."