US stocks have fallen after weaker-than-expected manufacturing output data increased fears that the economic recovery will be both slow and uneven.

The figures came from the Institute for Supply Management’s closely watched purchasing managers index, which fell slightly to 52.6 in September.

While any figure above 50 indicates growth, analysts had expected a reading of 54 after August’s 52.9.

The Dow Jones index ended down 2%, its biggest day fall since 2 July.

It closed 203 points lower at 9,509.

The Nasdaq index also declined, falling 3% or 65 points to 2,057.

Consumer boost

Commentators said investor confidence was also hit by a worse-than-expected rise in the weekly unemployment rate.

While the economy is emerging from recession, recovery is likely to proceed in fits and starts rather than a continuous upward march Zach Pandl, Nomura Securities International

Both sets of data overshadowed official figures showing that US consumer spending rose in August at the highest rate for almost eight years.

Yet while consumer spending advanced 1.3% in August compared with July, much of this gain was thanks to the US government’s “cash for clunkers” car scrappage scheme.

This programme ended on 24 August, and the Big Three US car firms – General Motors, Ford and Chrysler – all reported on Thursday that their September sales had fallen as a result.

“While the economy is emerging from recession, recovery is likely to proceed in fits and starts rather than a continuous upward march,” said Zach Pandl, an economist at Nomura Securities International in New York.

“This uneven pattern of growth is what we’ve been seeing for the last several weeks.”

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