The Institute for Supply Management said its index of national factory activity fell to 32.4 -- the lowest since 1980 -- from 36.2 in November.

A reading below 50 indicates contraction in the sector.

Economists had expected a reading of 35.5, according to the median of their forecasts in a Reuters poll. Their 69 forecasts ranged from 32.0 to 40.0.

(Reporting by Burton Frierson, Editing by Chizu Nomiyama)