updated 6/1/2005 10:53:00 AM ET 2005-06-01T14:53:00

U.S. manufacturing activity expanded in May for the 24th consecutive month, but the rate was slower than it was in April and fell short of analysts’ expectations, a private research group said on Wednesday.

Major Market Indices

The Institute for Supply Management’s manufacturing index stood at 51.4 in May, down from a reading of 53.3 the previous month and below analysts’ expectations for a reading of 52. The index is at its lowest level since June 2003 when it registered 50.4.

The data indicates that the manufacturing sector is losing momentum, the institute said. A reading of 50 or above in the index means the manufacturing sector is expanding, however. A figure below 50 represents a contraction.

The rate of growth in new orders in May continued to decline with only 11 of 20 industries reporting improvement compared with April, the report said. Also, the employment index failed to grow, ending 18 months of expansion, it said.

In a separate report Wednesday, the Commerce Department said construction spending rose 0.5 percent to a record level in April, as office construction surged and activity in the housing market hit an all-time high.

The Commerce Department said the increase pushed building activity to a seasonally adjusted annual rate of $1.066 trillion in April, following gains of 0.6 percent in March and 1.2 percent in February.

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