CHICAGO, May 29 (Reuters) - Business activity in the U.S. Midwest contracted in May at a much more severe rate than expected, reversing an unexpectedly strong result last month, a report showed on Friday.
The Institute for Supply Management-Chicago business barometer fell to 34.9 in May from 40.1 in April.
Economists had forecast the index at 42.0. A reading below 50 indicates contraction in the regional economy.
The employment component of the index fell to 25.0 from 31.8 in April. New orders slipped to 37.3 from 42.1 but production was steady at 38.1. Prices paid rose to 29.8 from 28.4. (Reporting by Ros Krasny; Editing by James Dalgleish)