The Chicago Purchasing Managers' Business Barometer plunged to 52.6 in July from 62.6 in June, the National Association of Purchasing Management-Chicago said Thursday.
This was the largest one month drop since October 2008. The index is now at its lowest level since June 2013
The data is compiled on a seasonally adjusted basis. An index reading below 50 signals a slowing economy, while a level above 50 suggests expansion.
Economists polled by Thomson Reuters predicted a 63.0 reading for the index.
"In spite of the sharp decline this month, feedback from purchasing managers was that they saw the downturn as a lull rather than the start of a new downward trend," according to a press release. "This was especially so given the recent strong performance and the fact that Employment managed to increase further in July. Nonetheless, following a strong Q2, this was clearly a poor start to Q3 and as such tempers some of the increased optimism in recent months."