December Chicago Business Activity Shows Sharp Recovery—But Contraction Continues

MNI Indicators released a closely watched report this week revealing an unexpectedly strong performance by its Chicago business barometer in December, signaling renewed momentum in the region’s commercial sector. The headline gauge surged to 43.5, a remarkable turnaround from November’s 36.3 reading—far outpacing analyst forecasts that had pegged the measure at 39.5.

Despite the impressive monthly bounce, the regional barometer continues to paint a cautionary picture. The gauge has remained below the 50-point expansion threshold for an unprecedented twenty-five consecutive months, underscoring a persistent contraction in Chicago-area business conditions.

What Drove the Rebound

The strength in December’s barometer reading was largely propelled by a dramatic resurgence in new orders, which climbed 11.8 points and virtually erased November’s sharp downturn. The production index similarly demonstrated muscle, advancing 9.6 points to reclaim ground above its 2025 average and reach its highest standing since March, suggesting manufacturers are responding to improved demand signals.

Order backlogs also posted a significant gain, jumping 12.3 points, though this metric remains subdued. MNI Indicators flagged that backlogs have hovered below 40 for most of the year, marking only three months where the index rose above this historically weak threshold.

Mixed Signals Elsewhere

The report presented a more nuanced picture across other dimensions. Supplier deliveries fell 3.6 points but held above 50, indicating continued supply-side resilience. However, the employment index retreated 0.6 points to its lowest level since May 2009—a concerning signal that hiring remains constrained despite the headline improvement. The prices paid index dipped 1.1 points, with MNI Indicators noting that for the third consecutive month, no survey respondents reported declining prices, suggesting cost pressures persist.

The December rebound offers a mixed outlook: while activity indicators show genuine improvement, the employment weakness and the barometer’s extended stay below expansion levels suggest Chicago’s business recovery remains fragile and uneven.