A report from the Institute for Supply Management (ISM) showed on Monday the U.S. manufacturing sector expanded in May at a slower pace than in April.

The ISM's index of manufacturing activity came in at 52.1 percent last month, down 0.7 percentage point from the April reading of 52.8 percent, missing economists' forecast for a 53.0 percent reading.

That was the lowest reading since October 2016.

A reading above 50 percent indicates expansion, while a reading below 50 percent indicates contraction.

The monthly drop by the headline index was primarily attributable to slower increases in production (-1.0 percentage point to 51.3 percent in May), supplier deliveries index (-2.6 percentage point to 52.0 percent) and the inventories index (-2.0 percentage points to 50.9 percent). Meanwhile, new orders (+1.0 percentage points m-o-m to 52.7 percent), employment (+1.3 percentage point to 53.7 percent) and prices (+3.2 percentage points to 53.2 percent) indicators recorded gains.

Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee said, “The past relationship between the PMI and the overall economy indicates that the PMI for May (52.1 percent) corresponds to a 2.7-percent increase in real gross domestic product (GDP) on an annualized basis,” says Fiore.”