The Chicago Purchasing Manager Index, which summarizes business activity, came in at 54.2 in May, rising from 52.6 in the prior month, survey data from The Institute for Supply Management showed.
The Econoday consensus estimate for May was 53.6.
Production rebounded following a decline in April, but failed to match the 12-month average. New orders increased for the first time in three months, but the pace of growth was not sufficient to offset the decline in April.
Employment eased to a level not seen since October 2017 as demand for labor remained weak, reflected by weaker growth in demand and production.
Order backlogs declined into contraction for the second time in 2019, reflecting weaker demand. Meanwhile, supplier delivery times continued to increase but at a lower rate than evidenced in April.
Firms noted that tariffs and delays added to their costs, thereby making them less competitive.
A reading above the 50-point mark signals an expansion, while a reading below signals a contraction.