After reporting a slowdown in the pace of growth in Chicago-area business activity over the three previous months, MNI Indicators released a report on Friday showing business activity unexpectedly recorded its most impressive performance so far this year in November.
MNI Indicators said its Chicago business barometer spiked to 66.4 in November after falling to 58.4 in October, with a reading above 50 indicating growth in business activity. Economists had expected the index to edge down to 58.0.
The unexpected jump reflected increases across all five of the barometer's subcomponents, with resurgent orders, solid output and higher unfinished orders the month's key drivers.
The report said the new orders index jumped to its highest level since May of 2014 in November after easing over the two previous months, while the production index rose for the second straight month to reach a three-month high.
"Some firms said that while they were seeing increased orders in November, there were also demands from customers for earlier delivery on existing orders," said MNI Indicators.
The orders backlogs index also helped propel the business barometer higher in November, reversing October's decline and hitting a four-month high.
The report also said the employment index strengthened further during the month, hitting a three-month high and moving further clear of the neutral-50 mark.
Meanwhile, supply-side issues continued to weigh on firms, with the supplier deliveries index rising to its highest level since April of 2004 as some firms cited delays in sourcing deliveries from offshore suppliers.
MNI Indicators also said the prices paid index moderated in November but remained locked in a historically high range, continuing to signal elevated input expenses across firms.
"The MNI Chicago Business Barometer clipped a run of three consecutive declines in emphatic style in November, boosted primarily by resurgent orders - stronger than typically seen at this time of year and enough to push the Barometer to its best level since December," said Jamie Satchi, Economist at MNI Indicators.
He added, "However, many firms reported seeing the effects of higher China tariffs on their invoices for the first time, and voiced concern that business could be stifled going forward."
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