The contraction in US manufacturing activity continued into a fifth consecutive month in August, as demand remained weak, according to industry survey data published on Tuesday.

The data will likely reinforce calls for the Federal Reserve to start cutting interest rates later this month in order to lower borrowing costs and stimulate demand in the world's largest economy.

The Institute for Supply Management's (ISM) manufacturing index was 47.2 percent in August, up 0.4 percentage points from a month earlier, but still well below the 50-point mark separating expansion from contraction.

The figure was slightly below market expectations, according to Briefing.com.

"While still in contraction territory, US manufacturing activity contracted slower compared to last month," ISM survey chief Timothy Fiore said in a statement.

"Demand continues to be weak, output declined, and inputs stayed accommodative."

Fiore said demand was subdued, "as companies show an unwillingness to invest in capital and inventory due to current federal monetary policy and election uncertainty."

The August data point to ongoing challenges in the US manufacturing sector, which has now been in contraction territory for 21 out of the past 22 months.

Economists at High Frequency Economics said the figure was not "substantially worse than expected."

One survey respondent in the chemical products sector said they had seen a "noticeable slowdown in business activity."

"Previous optimism about future growth has been dashed," they added.

Another respondent in the computer and electronic products sector said their business outlook was "good" amid an ongoing recovery.

Fiore said production execution had fallen from a month earlier, "putting additional pressure on profitability."

"Suppliers continue to have capacity, with lead times improving and shortages not as severe," he added. (AFP)