The US manufacturing sector shrank for the second consecutive month in July, a survey showed Wednesday.

The US Institute of Supply Management (ISM) manufacturing index, also known as the purchasing managers index (PMI), stood at 49.8 percent in July, slightly higher than the estimate of 49.7 percent in June, Xinhua reported.

A reading above 50 percent indicates that the manufacturing sector is generally expanding, while a reading below that ratio indicates contraction.

The US Federal Reserve Wednesday said the nation's economic activity slowed pace in the first half of this year, and predicted that the US economic growth to remain moderate over coming quarters.