Growth in Chicago-area business activity slowed by much more than anticipated in the month of December, according to a report released by MNI Indicators on Friday.
MNI Indicators said its Chicago Business Barometer slid to 54.6 in December after jumping to a nearly two-year high of 57.6 in November.
While a reading above 50 indicates continued growth in Chicago-area business activity, economists had expected the index to show a much more modest drop to 57.0.
The pullback by the business barometer was led by a slowdown in new orders growth, as the new orders index slumped to 56.5 in December from 63.2 in November.
The report also showed a contraction in order backlogs, with the order backlogs index plunging to 42.6 in December from 52.8 in the previous month.
The production index also edged down to 58.5 in December from 59.1 in November, while the employment index came in unchanged at 49.7.
Despite the monthly decrease, MNI Indicators noted the business barometer averaged 54.3 in the fourth quarter, the highest in two years.
"The Chicago Business Barometer ended 2016 in a much healthier position than a year ago when it slipped into contraction," said Jamie Satchithanantham, economist at MNI Indicators.
He added, "This is largely owed to stronger outturns in the second half of the year and is testament to the resilience of the U.S. economy."
Satchithanantham also said most survey respondents remain upbeat about the fate of their business heading into 2017 due to optimism about the incoming Trump administration.
On the inflation front, the report said the prices paid index rose to 58.0 in December from 56.8 in November, indicating a faster rate of price growth.
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