The biggest decline in factory jobs in two years reported by the U.S. Labor Department adds to signs that manufacturing is bearing the brunt of the slowdown in global growth.

Factory payrolls declined by 15,000 workers last month, the biggest drop in two years, according to figures from the Labor Department issued in Washington. The report also showed the workweek shrank and the share of industries hiring plunged to the lowest level in almost three years.

Combined with earlier reports showing less demand for capital equipment and growing pessimism among purchasing managers, today’s figures show manufacturing, which helped lead the U.S. out of the worst recession in the post-World War II era, is pulling back. Companies such as Intel Corp. are among those cutting forecasts as business investment cools and economies from Europe to Asia slow.

“There is a clear loss of momentum in manufacturing,” said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts. “I don’t think manufacturing is going into reverse, but I think it’s stagnating.”

While the drop in factory hiring last month was magnified by changes in the annual shutdowns at auto plants, the decline extended beyond a single industry. Producers of wood products, fabricated metals, electrical equipment and semiconductors also reduced headcounts in August, today’s report from the Labor Department showed.

Intel Forecast

Intel, the world’s largest semiconductor maker, slashed its third-quarter sales prediction today amid declining demand for personal computers from corporate customers. Sales will be $12.9 billion to $13.5 billion, down from a prior projection of $13.8 billion to $14.8 billion, the Santa Clara, California-based company said in a statement. Analysts on average had estimated sales of $14.2 billion, according to data compiled by Bloomberg.

The workweek for all factory employees fell to 40.5 hours on average in August, the lowest since November and down from 40.7 hours the prior month, the figures showed. The number of hours had been as high as 40.9 in the first two months of 2012.

A gauge of the share of manufacturers hiring last month plunged to 36.4, the weakest since November 2009, from 50.6 in July, the data showed. Readings lower than 50 indicate fewer industries took on staff.

Makers of motor vehicles and parts cut staff by 7,500 workers last month, representing a partial payback from the 14,000 gain in July. Automakers shut fewer plants during the annual retooling in July in order to rebuild depleted inventories and therefore furloughed fewer workers than projected by the government when it adjusts the data for seasonal variations.

Auto Manufacturers

Because fewer workers were let go in July, fewer were also recalled in August, precipitating last month’s drop when the figures are adjusted for these seasonal influences.

Today’s jobs report comes on the heels of other data that indicated assembly lines were slowing. Manufacturing shrank for a third month in August in the longest decline since the recession ended in 2009, a report from the Tempe, Arizona-based Institute for Supply Management showed this month. The group’s factory index fell to 49.6, the lowest since July 2009. Measures of orders and production dropped to three-year lows.

The ISM’s gauge of factory employment decreased to the lowest level since November 2009.

Demand for U.S.-made capital goods such as machinery and communications gear dropped in July by the most in eight months, according to a report last month from the Commerce Department. Bookings for non-defense capital goods excluding aircraft are considered a proxy for future business investment and the report prompted economists at Morgan Stanley in New York to reduce their forecast for the gain in third-quarter business spending.

Spending Plans

Intel is also among those companies planning to spend less on new plants and equipment this year. Capital expenditures will be less than the low end of its prior 2012 forecast range of $12.1 billion to $12.9 billion, the company said today.

“Firms have pulled in in terms of equipment and software spending and capital equipment,” said John Silvia, chief economist at Wells Fargo Securities LLC in Charlotte, North Carolina. “They’re looking at an economy growing at 1.5 percent to 2 percent and they have all the equipment they need and all the employees they need to produce that kind of output.”

A factory slowdown would come as a setback to President Barack Obama, who has highlighted manufacturing as an engine for job creation and a sign his policies support business growth. Even including last month’s drop, factory payrolls have expanded by 512,000 workers after falling to an almost 70-year low in January 2010.

“After a decade that was defined by what we bought and borrowed, we’re getting back to basics, and doing what America has always done best: We’re making things again,” Obama said yesterday in accepting the Democratic Party’s nomination to a second term.

Tax Breaks

Doubling exports by offering tax breaks to U.S. businesses can create a million new manufacturing jobs in the next four years, he said.

The decline in factory hiring and hours last month means production may have eased. Industrial output was probably little changed in August after advancing for four consecutive months, according to the median estimate of economists surveyed by Bloomberg before the Federal Reserve’s Sept. 14 report.

“The manufacturing sector overall looks like it softened quite sharply,” Bruce Kasman, chief economist at JPMorgan Chase & Co. in New York, said in a conference call today. “Manufacturing is going through an adjustment that is going to give us at least for the month of August, but potentially for the next couple of months, flat to down readings on the production side.”