Chicago's Business Recovery Catches Everyone Off Guard—Here's What the December Barometer Reveals

MNI Indicators just dropped some surprising news: Chicago’s business activity picked up far more strongly than anyone predicted in December. The closely watched barometer skyrocketed to 43.5, a dramatic turnaround from November’s 36.3 slump. Wall Street analysts had been betting on just a 39.5 reading, which means this recovery overshot expectations by roughly 4 points.

The Good News: Strong Signals in Key Areas

The headline numbers tell a compelling story. The new orders index absolutely exploded, gaining 11.8 points and essentially erasing November’s painful decline in a single month. That’s the kind of snapback you don’t see every day. Production followed suit, jumping 9.6 points to climb above its 2025 average and hit its highest mark since March—a tangible sign that factories and businesses are actually ramping up activity.

Order backlogs also surged impressively, climbing 12.3 points. However, here’s the catch: while it’s moving in the right direction, the index still hovers below 40, reinforcing that there’s limited room for celebration. The index has only managed to stay above that weak threshold for three months all year.

The Uncomfortable Reality

But before we pop the champagne, let’s pump the brakes. The Chicago business barometer remains stuck below 50 for the twenty-fifth consecutive month straight—that’s nearly two years of consistent economic contraction signaled through this indicator. One strong month doesn’t erase a structural slowdown.

On the employment front, things got worse. The jobs index edged down 0.6 points to reach its lowest point since May 2009, a painful reminder that hiring momentum continues to weaken despite the rebound in orders and production. Meanwhile, the supplier deliveries index softened by 3.6 points, though it stayed comfortably above 50.

Pricing Pressure: A Silver Lining

One genuinely positive note: the prices paid index dipped 1.1 points, and for the third straight month, zero respondents reported paying lower prices. That stability in pricing suggests businesses aren’t desperately cutting costs to compete, which typically signals confidence that demand will hold.

The Chicago business barometer’s December jump is undoubtedly encouraging, but the bigger picture remains complicated—strong orders and production are good, but persistent employment weakness and 25 months of readings below 50 suggest this economy still has serious structural challenges to work through.