U.S. factory activity grew at the slowest pace in six months in December, weakened by declines in orders and production.

The Institute for Supply Management, a trade group of purchasing managers, says its manufacturing index fell to 55.5 in December from 58.7 in November. Any reading above 50 signals expansion. November's figure was just below a three-year high reached in October.

December's reading is the lowest since June. But it is also close to the average for all of 2014, a sign factory output remains healthy. Manufacturing was a key source of growth last year.

Despite the slowdown, a measure of employment rose, suggesting factories likely added jobs last month.