The Chicago Purchasing Managers' Business Barometer rose to 54.7 in July from 49.4 in June, the National Association of Purchasing Management-Chicago said Friday.
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 50.5 reading for the index.
"The Chicago Business Barometer increased 5.3 points to 54.7 in July led by a double digit gain in Production and accompanied by gains in New Orders and the other three components.," according to a release.
"While all componentsthat comprise the Barometer rose in July, three of them — Order Backlogs, Supplier Deliveries and Employment — remained in contraction, although these elements would be expected to lag," the release noted.