MNI Indicators’ report revealed on Tuesday that business activity in Chicago expanded in August at a slower pace than in July.

The MNI Chicago Business Barometer, also known as Chicago purchasing manager's index (PMI) came in at 66.8 in August, down from an unrevised 73.4 in July.

Economists had forecast the index to drop to 68.0.

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

According to the report, Production plunged 7.8 points to a two-month low of 61, while New Orders decreased 4.4 points to 67.8, suggesting demand is growing at a slower pace compared to July. At the same time, Order Backlogs jumped 11.6 points to 81.6, its highest reading since 1951, while Supplier Deliveries climbed 6.3 points to 92.8, its three-month high, and Inventories increased 6.2 points to 48.8, its highest level since March though still signaling contraction. On the price front, Prices paid at the factory gate rose 2.3 points to 93.9, hitting the highest level since 1979 as companies continued to report higher costs for production materials.