U.S. manufacturing activity slumped in March to the lowest level in nearly three years as new orders plunged, and analysts said activity could decline further due to tighter credit conditions.

The Institute for Supply Management (ISM) survey on Monday showed manufacturing PMI fell to 46.3 last month, all subcomponents of data below the 50 threshold for the first time since 2009. Economists polled by Reuters had forecast the index would dip to 47.5.

Some economists said this suggested a recession was around the corner, while others said much would depend on the services sector, whose PMI remains consistent with a growing economy.

The survey made no direct comment on recent financial market turmoil. Makers of miscellaneous products said they were "closely monitoring the global banking situation" but there were no impacts "at this time."

Federal Reserve rate hikes to fight inflation have raised borrowing costs and cooled demand for goods.

"Manufacturing is pulling back, but the service sector was still chugging along in February," said Chris Low, chief economist at FHN Financial in New York. "As long as it remains well above 50 when reported on Wednesday, the broad economy should be just fine. Nevertheless, the health of manufacturing is related to the health of the overall economy."