Growth of business activity in the Chicago area picked up pace in December on continued strong underlying demand for goods, according to data released Thursday by MNI Indicators.
The Chicago Business Barometer rose to 63.1 in December from 61.8 in November, suggesting that growth accelerated over the month. The reading beat economists' forecasts, who in a poll by The Wall Street Journal expected it to come in at 62.0.
The barometer is compiled after surveying companies in the Chicago area to assess business conditions. Readings above 50 point to expansion of activity, while readings below 50 indicate contraction.
The reading takes into account five components: new orders, order backlogs, production, supplier deliveries, and employment.
Among the main five indicators, production and new orders were higher; while order backlogs, employment, and supplier deliveries indexes fell.
The gain in the headline index was supported by a sharp increase in the new orders index to 66.5. The production index increased marginally, suggesting steady output growth.
The employment index declined for the second month in a row, dropping seven points to the lowest level since June. "Firms stated that finding new hires to fill empty positions is challenging," the report said.
The survey showed signs of easing supply-chain bottlenecks.
The supplier deliveries index dropped to 80.5, still signaling long delivery times but less so than in the previous month. However, firms continued to report slow deliveries, port congestion and trucking issues.
The order backlogs index dropped 5.2 points to the lowest reading this year, and inventories rose for the third consecutive month.
The prices paid for raw materials index declined 4.2 points to a seven-month low of 89.6 in December, signaling that prices grew at a slightly slower pace. However, the reading is still above the 12-month average of 88.0, as shortages of certain materials led to inflated costs, MNI Indicators said.
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