The Chicago Purchasing Managers' Business Barometer fell to 52.4 in March from 55.6 in February, the National Association of Purchasing Management-Chicago said Thursday.
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 56.5 reading for the index.
The production index dropped to 51.8 from 60.2, the new orders index decreased to 53.0 from 60.2, the order backlogs fell to 45.0 from 50.9 in the prior survey and inventories slumped to 41.0 from 50.1. The employment index dipped to 55.7 from 55.1; and the supplier deliveries index was at 58.0, up from 50.3 last month. The prices paid index slid to 61.0 from 61.8.