A report from the Institute for Supply Management (ISM) showed on Wednesday the U.S. manufacturing sector's activity contracted in March.

The ISM's index of manufacturing activity came in at 49.1 percent last month, down 1.0 percentage point from the February reading of 50.1 percent. That was above economists' forecast for a 45.0 percent reading.

A reading above 50 percent indicates expansion, while a reading below 50 percent indicates contraction.

According to the report, the New Orders Index stood at 42.2 percent in March, a decline of 7.6 percentage points from the February reading, while the Production Index registered 47.7 percent, down 2.6 percentage points compared to the February reading, the Backlog of Orders Index posted 45.9 percent, a drop of 4.4 percentage points compared to the February reading, and the Employment Index came in at 43.8 percent, a fall of 3.1 percentage points from the February reading. Meanwhile, the Supplier Deliveries Index registered 65 percent, up 7.7 percentage points from the February reading, limiting the decline in the composite PMI.

Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee, noted: "Comments from the panel were negative regarding the near-term outlook, with sentiment clearly impacted by the coronavirus (COVID-19) pandemic and energy market volatility." He also added that "The past relationship between the PMI® and the overall economy indicates that the PMI for March (49.1 percent) corresponds to a 1.8-percent increase in real gross domestic product (GDP) on an annualized basis."