Manufacturing pace slows

NEW YORK - The nation's manufacturing sector expanded in May, but at a lower rate than Wall Street analysts expected, providing a further sign that the U.S. economy may be slowing. Many manufacturers also reported higher prices for raw materials.

The Institute for Supply Management, a trade group based in Tempe, Ariz., said Thursday that its manufacturing index registered 54.4 in May, down from 57.3 the month before and below the 56.5 reading that analysts had anticipated. It was the slowest growth reading since the gauge registered 53.5 last August.

A reading of 50 or more indicates expansion, while below 50 indicates contraction. The May figure represented the 36th consecutive month of growth.

The index is watched closely because it is among the first measures of the previous month's economic activity.

Many experts believe the U.S. economy has begun to slow as higher interest rates have reduced demand for housing while rising fuel prices have put a crimp in consumer spending.