U.S. manufacturing activity contracted less than expected in March, but disruptions caused by the coronavirus pandemic pushed new orders received by factories to an 11-year low, reinforcing economists' views that the economy was in recession.

The economy's outlook was further dimmed by other data on Wednesday showing private payrolls dropped last month for the first time in two-and-a-half years as businesses shut down in compliance with strict measures to contain the highly contagious virus.

The grim economic picture has forced the Federal Reserve to take extraordinary measures, and President Donald Trump last Friday signed a 2.2-trillion-U.S.-dollar stimulus package.

"Manufacturing is back in recession, joining the rest of the economy," said Chris Rupkey, chief economist at MUFG in New York. "With only a few actual data points so far, the results indicate this is looking more like a depression than a garden-variety recession."

The Institute for Supply Management (ISM) said its index of national factory activity fell to a reading of 49.1 last month from 50.1 in February. A reading below 50 indicates contraction in the manufacturing sector, which accounts for 11 percent of the U.S. economy. Economists polled by Reuters had forecast the index would drop to 45.0 in March.

The smaller-than-expected drop in the ISM index reflected a jump in the survey's measure of supplier deliveries to a reading of 65.0 this month from 57.3 in February. A lengthening in suppliers' delivery times is normally associated with increased activity, which would be a positive contribution to the index. But in this case slower supplier deliveries indicate supply shortages related to the coronavirus pandemic and not stronger demand.

The ISM said comments from manufacturers "were negative regarding the near-term outlook, with sentiment clearly impacted by the coronavirus pandemic and energy market volatility."

More than 80 percent of Americans are under some form of lockdown as states and local governments try to contain the spread of the virus, bringing the nation to an abrupt stop. The United States has the highest number of confirmed cases of COVID-19, the respiratory illness caused by the virus, with nearly 188,000 people infected. Almost 4,000 people in the country have died from the illness, according to a Reuters tally.

As well as causing disruptions in supply chains, the pandemic has shut down demand, with the transportation industry almost crawling to a halt, and restaurants, bars and other social venues shutting.

Those business closures resulted in private payrolls falling by 27,000 jobs last month, the first decline since September 2017, the ADP National Employment Report showed separately on Wednesday. Private payrolls advanced by an unrevised 183,000 in February. The payrolls drop in March was concentrated among small businesses, while larger companies added workers.

"Looking ahead, the timing and strength of the recovery is highly uncertain so long as major parts of the domestic economy are on virtual lockdown and external demand remains in the doldrums," said Oren Klachkin, lead economist at Oxford Economics in New York.

Economists had forecast private payrolls would fall by 150,000 jobs in March. The smaller-than-expected decline was due to establishments being surveyed in mid-March, before many states and local governments ordered residents to stay at home unless on essential business.