MNI Indicators’ report revealed on Friday that business activity in Chicago contracted this month.

The MNI Chicago Business Barometer, also known as Chicago purchasing manager's index (PMI) came in at 50.4 in August, up from an unrevised 44.4 in July. Economists had forecast the index to increase to 47.5.

A reading above 50 indicates improving conditions, while a reading below this level shows worsening of the situation.

According to the report, only two components of the headline indicator saw a monthly decline, as Supplier Deliveries posted a steep decline, dropping to 50.3 from July’s 55.6. In addition, Inventories tumbled by 11.2 percent to 47.9, indicating that firms started to run down inventories in August. Meanwhile, New Orders, recorded the largest single component monthly gain and shifted back into expansion, while Order Backlogs climbed to 51.3 in August from 43.5 in July. Production recorded a pickup of 6.7 points but remains muted. Employment indicator rose slightly to 43.7 but remained in contraction territory.