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

The ISM's index of manufacturing activity came in at 51.7 percent last month, down 0.4 percentage point from the May reading of 52.1 percent, but beat economists' forecast for a 51.0 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.

According to the report, the New Orders Index stood at 50 percent, a decline of 2.7 percentage points from the May reading, while the Inventories Index recorded 49.1 percent, a decrease of 1.8 percentage points, and the Supplier Deliveries Index registered 50.7 percent, a fall of 1.3-percentage point. At the same time, the Production Index came in at 54.1 percent in June, a 2.8-percentage point advance compared to the May reading, and the Employment Index was at 54.5 percent, an increase of 0.8 percentage point.

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 June (51.7 percent) corresponds to a 2.6-percent increase in real gross domestic product (GDP) on an annualized basis.”