2023.12.2914:47:00UTC+00Chicago Business Barometer Indicates Substantial Downturn In December

Chicago-area business activity saw a substantial downturn in the month of December, according to a report released by MNI Indicators on Friday.

MNI Indicators said its Chicago business barometer tumbled to 46.9 in December from 55.8 in November, with a reading below 50 indicating contraction. Economists had expected the index to drop to 51.0.

In the previous month, the Chicago business barometer saw its biggest monthly increase since September of 2020, returning to expansionary territory for the first time since August 2022.

The much steeper than expected drop by the Chicago business barometer came as all the main subcomponents that feed into the headline number fell compared to November, with the employment, inventories and new orders indexes returning to contractionary territory.

The report said the employment index tumbled to 45.1 in December from 53.9 in November, returning to contraction after two months of expansion.

The inventories index also plunged by 14.7 points, hitting the lowest level since July, while the new orders index slumped by 10.2 points.

MNI Indicators said the production index also dipped to 58.8 in December from 62.4 in November, with respondents reporting higher production falling by more than respondents reporting lower production.

Meanwhile, the report said prices paid surged to 70.0 in December from 59.9 in November, reaching the highest level since August.