Chicago-area business activity unexpectedly contracted at a faster pace in May, according to a report released by MNI Indicators on Friday.
MNI Indicators reported that the Chicago business barometer declined to 35.4 in May from 37.9 in April. A reading below 50 indicates contraction. Economists had anticipated the business barometer would rise to 41.0.
This unforeseen drop brings the business barometer to its lowest point since May 2020.
The decline in the business barometer was partly driven by a significant fall in the new orders index, which plummeted by 9.2 points to its lowest level since May 2020.
The order backlogs index also fell sharply by 8 points, reaching its lowest since May 2020, while the employment index decreased by 1.4 points to its lowest level since June 2020.
However, the production index increased by 8.1 points after five consecutive months of decline, achieving its highest level since January.
Additionally, the report indicated that the prices paid index slightly decreased by 0.9 points. Nevertheless, MNI Indicators highlighted that it still remains at the second-highest level since August 2023.
