NEW YORK (CNN/Money) - Don't let today's ISM manufacturing survey fool you -- it's really a four-letter word in disguise.

Yes, don't forget that the report from the Institute of Supply Management used to be called NAPM and was named for the National Association of Purchasing Management. But whatever you call it today the message is the S-A-M-E: the manufacturing sector is losing steam.

In fact it's four-letter words that may be coming out of the mouths of people who are bullish on the economy after seeing today's report. The May ISM index dropped to 51.4 from 53.3 in April, and is now back down to its lowest level since June 2003. Yes, the index is still above 50, and that means "expansion," but it is moving in the wrong direction.

Norbert Ore who heads up the ISM's Manufacturing Business Survey said the latest numbers show the sector is losing momentum in remarks accompanying today's release. "The manufacturing sector is definitely slowing, and the question is whether a somewhat stronger dollar and the burden of high energy costs are slowly bringing this manufacturing growth cycle to end."

The downshiftng in the May number, which covers more than 400 manufacturing companies across the country in 20 different industries, did not come as a surprise.

On Tuesday the Chicago area's Purchasing Manager's index fell very sharply. But there is one big caveat here: this is NOT I repeat NOT strictly speaking an index of manufacturing activity, it is actually an index of broader business activity that includes services companies as well (if you don't believe me, call them and ask them -- I already have).

Now, there is a lot of manufacturing (think autos for example) in the Midwest so this Chicago index surely reflects factory strength to a large degree. But not 100 percent (did I mention these purchasing managers are a tricky lot?). And the index didn't just decline -- it dove 11-1/2 points lower! -- the deepest drop since August 1974. Now it's still above 50 which indicates expansion ... but barely. It has to make you wonder what happened to make it tumble like that.

And it's not just Chicago: the manufacturing surveys conducted by Federal Reserve regional banks for New York and Philadelphia also moved sharply lower last month. In fact all three of these indexes are at their lowest levels since spring of 2003.

Jon Lonski of Moodys Investor's Service thinks this happened because sales grew more slowly than inventories in the first quarter. He says sales are picking up the second quarter so this should help get inventories back in balance and pave the way for an upturn in manufacturing output.

Looking ahead, a drop in the employment sub-component of the ISM report could mean fewer manufacturing jobs in this week's May employment report. And a really steep drop in "prices paid" could alleviate some of the Federal Reserve's inflation worries.

No matter how you slice it though, today's weakening ISM survey looks like a B-A-D sign that things in manufacturing ain't all that G-O-O-D.

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-- Kathleen Hays is economics correspondent for CNN and contributes to Lou Dobbs Tonight. You can read more of her columns here.