The ISM said its purchasing managers index for US dropped to 57.7 in October from 59.8 in September, although a reading above 50 still indicates growth in the manufacturing sector.

With the much bigger than expected decrease, the manufacturing index fell to its lowest level since hitting 57.3 in April.

"Consumption softened, with production and employment continuing to expand, but at lower levels compared to September," said Timothy Fiore, Chair of the ISM Manufacturing Business Survey Committee.

He added, "Supplier labor issues and transportation difficulties continue to disrupt production, but at more manageable levels."

The bigger than expected decrease by the headline index came as the new orders slumped to 57.4 in October from 61.8 in September and the production index tumbled to 59.9 from 63.9

The employment index also slid to 56.8 in October from 58.8 in September, indicating a slowdown in the pace of job growth in the manufacturing sector.

Meanwhile, the report said the prices index jumped to 71.6 in October from 66.9 in September, pointing to a significant acceleration in the pace of price growth.