A report from the Institute for Supply Management (ISM) showed on Tuesday the U.S. manufacturing sector’s activity expanded in May at a slightly stronger pace than in April.

The ISM's index of manufacturing activity came in at 61.2 percent last month, up 0.5 percentage point from an unrevised April reading of 60.7 percent. The May reading pointed to the growth in the manufacturing sector for the 12th straight month.

Economists' had forecast the indicator to edge up to 60.9 percent.

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

According to the report, the New Orders Index was at 67.0 percent, increasing 2.7 percentage points from the April reading, while the Backlog of Orders Index came in at 70.6 percent, 2.4 percentage points higher compared to the April reading and the Supplier Deliveries Index stood at 78.8 percent, up 3.8 percentage points from the April figure. Meanwhile, the Production Index registered 58.5 percent, a drop of 4 percentage points compared to the April reading and the Employment Index recorded 50.9 percent, 4.2 percentage points lower than the April reading. On the price front, the Prices Index posted 88 percent, down 1.6 percentage points compared to the April reading.

Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee, noted that the manufacturing economy continued its growth in May but Survey Committee members reported that their companies and suppliers continue to struggle to meet increasing rates of demand. “Record-long lead times, wide-scale shortages of critical basic materials, rising commodities prices and difficulties in transporting products are continuing to affect all segments of the manufacturing economy,” he said. “Worker absenteeism, short-term shutdowns due to part shortages, and difficulties in filling open positions continue to be issues that limit manufacturing-growth potential.” Fiore also said that the past relationship between the PMI and the overall economy indicated that the PMI for May (61.2 percent) corresponds to a 5.2-percent increase in real gross domestic product (GDP) on an annualized basis.