The Chicago Business Barometer, or Chicago PMI, dropped to 35.4 in May from 37.9 in April, marking its lowest point since May 2020 during the pandemic.
This figure was much lower than expected, as economists surveyed by the Wall Street Journal had predicted a reading of 40.8.
This marks the sixth consecutive month the index has been in contraction.
The index, produced by ISM-Chicago and MNI, is made available to subscribers three minutes before its public release at 9:45 am Eastern.
It is one of the final regional manufacturing indices released before the key national ISM manufacturing survey for May, which will be published on Monday.
Economists noted that other regional Fed manufacturing surveys for May have shown some improvement.
