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Recent signs of a slowdown in the U.S. economy were reinforced Thursday by a key manufacturing survey.

The Institute for Supply Management said its manufacturing index hit 61.1 in June, slightly below the forecast of 61.5 and down from 62.8 in May. Although the report was still "very encouraging," according to Norbert Ore, chair of the ISM, it does show some deceleration in the pace of growth.

"Their peak levels were too high to be sustained," said Ian Shepherdson, chief economist at High Frequency Economics.

After a sizeable drop in the Chicago purchasing manager's index on Wednesday, some investors were poised for a disappointing ISM report. The Chicago purchasing managers index plunged to 56.4 in June, from 68 in May. That report followed two months of declining durable goods orders and a downward revision to first quarter gross domestic product.

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The ISM's new orders index fell to 60 in June from 62.8 in May, while production declined to 63.2 from 64.8 in May. The prices-paid index fell to 81 from 86 in May. In addition, the ISM's employment component fell to 59.7 last month from 61.9 in May. That does not bode well for Friday's employment report. Economists are expecting 250,000 payroll gains.

Weekly unemployment claims also point to some softening in the job market of late. Initial jobless claims edged up in the week ended June 26 to 351,000, from a revised 350,000 in the prior week. Investors were expecting claims to fall to 343,000. The four-week moving average of new claims increased by 2,500 to 347,000, the highest level in 10 weeks.

In a separate release, construction spending rose 0.3% in May, below expectations for a 0.7% increase. In April, construction spending rose a revised 1.2%, down from an initial estimate of 1.3%.