The business index that includes Illinois, Indiana and Michigan, hit a 3 1/2-year low in April, then jumped 9.7 points higher in May. But in June, the ISM said the regional Purchasing Managers Index posted its largest monthly drop in more than four years, sliding from 58.7 to 51.6.
Figures higher than 50 indicate growth while figures less than 50 indicate a business contraction.
In June, of the five measures that make up the PMI, four declined, the ISM said.
The employment index, measuring the number of workers, rose but frequently is a step behind the rest. Generally, business activity picks up and then businesses hire. In reverse, business activity declines and after that workers are let go.
Backlogged orders "plunged deep into contraction to the lowest level since September 2009," the institute said. Declines were also noted in new orders and production levels, as well as faster delivery times.
"Activity dropped back in June following the large rise in May," said Philip Uglow, chief economist at MNI Indicators.
"The trend level of the barometer has picked up since the fourth quarter of 2012, and while these latest data point to some weakening between the first and second quarter, it is too early to say if this will continue," he said.
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