December's Chicago Business Index Surges Past Forecast as Activity Shows Unexpected Momentum

MNI Indicators released data on Tuesday revealing a stronger-than-anticipated recovery in Chicago-area business conditions for December, with its barometer climbing to 43.5 from November’s 36.3—outpacing economist expectations of 39.5. The impressive jump suggests renewed vigor in the Midwest’s business landscape, though broader contraction pressures persist.

Key Drivers Behind the Upswing

The headline barometer’s advance was primarily fueled by new orders, which accelerated by 11.8 points and nearly erased November’s significant downturn. Production activity also showed strength, rising 9.6 points to climb above its 2025 average and reach levels not seen since March. Order backlogs similarly surged, jumping 12.3 points, though the metric continues hovering below the 40 threshold and has only exceeded this level for three months throughout the year.

Mixed Signals Underneath the Surface

Despite the barometer’s rebound, underlying conditions remain uneven. Supplier deliveries eased 3.6 points but stayed above the 50-mark indicating expansion. Employment metrics proved more concerning, with the employment index sliding 0.6 points to its lowest point since May 2009. On pricing, the paid prices index dipped by 1.1 points, with MNI Indicators noting that not a single respondent reported declining prices for the third consecutive month—suggesting persistent cost pressures across the region.

The Broader Picture

While the December barometer recovery is notable, the index’s twenty-fifth consecutive month below 50 underscores ongoing economic contraction in the Chicago region. The rebound reflects cyclical improvement rather than a fundamental trend shift, with businesses navigating between resilience in order activity and weakness in hiring and pricing power.

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