NEW YORK (AP) – Business at the nation’s manufacturers declined for the third consecutive month in May, but at a much slower rate, a private business group reported Monday.

The Institute for Supply Management said its manufacturing index was 49.4 percent last month, up from 45.4 in April. A reading below 50 means manufacturing activity is slowing; above 50 indicates the industry is growing.

The result was somewhat better than forecasts by analysts, who had projected a reading of 48.5.

“There are signs of life in manufacturing,” said Norbert J. Ore, who oversees the index for ISM.

Ore noted that his group’s gauge of new orders to factories and production both topped 50 percent after two months of declines and that the prices paid by manufacturers for materials rose at a much slower rate.

“These are all signs of encouragement that manufacturing is recovering from the decline due to the war,” he said.

Investors had been looking forward to improved results following the release Friday of better-than-expected manufacturing figures. Those figures, reported by the Purchasing Management Association of Chicago, often foreshadow results of the national survey.

The last time the ISM index showed growth in manufacturing was in February, when it reached 50.5.

“It does suggest the manufacturing sector is recovering,” said John Silvia, chief economist for Wachovia Corp. “It appears as if the orders are there and there are backlogs behind these orders so that there’s some sustainability in terms of economic growth going forward.”

He said the ISM figure is particularly welcome news since it counters a report last week by the government showing that orders to U.S. factories for durable goods dropped in April.

The May index hints at some good news for manufacturers. ISM’s measure of new orders to factories rose from 45.2 percent in April to 51.9 in May. Production at plants also improved, rising from 47 percent to 51.5.

Other components of the ISM index continued to show a decline, but nevertheless improved. The measure of employment, for example, rose to 43 percent from 41.4 percent.

Of the 20 industry sectors surveyed by ISM, 11 reported growth including petroleum, glass, stone and aggregate materials; chemicals; and fabricated metals.

Ore said there was a split among supply managers surveyed by his group, with some seeing an uptick in business while others still saw their business stalled or are uncertain.

“This is not really unusual when the economy is at a crossroads,” he said. “Judging by the reversal in a number of the indexes this month, we are apparently at or near a crossroads.”

The ISM index is based on a survey of the managers who buy raw materials for manufacturing companies, giving them insight into the pace of industry.