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June 1, 2005 10:00 AM, EDT

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he Institute for Supply Management said Wednesday manufacturing activity expanded at a slower pace in May than a month earlier.

ISM said its factory index dropped to 51.4 from 53.3, the sixth straight decline. The index is at its lowest level since June 2003, although readings higher than 50 indicate growth.

A reading of 52 was expected for May, according to a Bloomberg News survey.

The group's new orders gauge, which makes up about a third of the total, dropped to 51.7 from 53.7 in April. The production index, a measure of work being performed, fell to 54.9 from 56.7.

The factory institute's employment index decreased to 48.8 from 52.3 in April. The inventories index dropped to 47.8 from 47.9. The new export orders index fell to 54.9 from 57.2.

ISM, Tempe, Ariz., surveys more than 400 companies in 20 industries, including transportation, to compile its index.