The Chicago Business Barometer, also known as the Chicago PMI, plummeted to 37.2 in November from 45.2 in the prior month. This is the lowest level since the pandemic hit in early 2020.
Economists polled by the Wall Street Journal forecast a slight improvement to a 47 reading.
Readings below 50 indicate contraction territory.
The index is produced by the ISM-Chicago with MNI. It is released to subscribers three minutes before its release to the public at 9:45 am Eastern.
The Chicago PMI is the last of the regional manufacturing indices before the national ISM data for November is released on Thursday.
Economist polled by the Wall Street Journal expect the IMF factory index to fall slightly below the 50 breakeven level.
The factory sector faces downside risks from slowing demand and headwinds from the stronger dollar, said Rubella Farooqi, chief U.S. economist at High Frequency Economics.