The Chicago Purchasing Managers' Business Barometer gained to 52.3 in July from 51.6 in June, the National Association of Purchasing Management-Chicago said Wednesday.
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 54.0 reading for the index.
The production index slipped to 53.6 from 57.0, the new orders index decreased to 53.9 from 54.6, the order backlogs rose to 42.9 from 38.4 in the prior survey and inventories slid to 37.7 from 41.4. The employment index fell to 56.6 from 57.8 and the supplier deliveries index was at 51.0, up from 46.9 last month. The prices paid index rose to 63.6 from 59.9.
