Business activity in the Chicago area unexpectedly increased at a notably faster rate in the month of October, according to a report released by MNI Indicators on Friday.
MNI Indicators said its Chicago business barometer jumped to 66.2 in October from 60.5 in September, with a reading above 50 indicating an increase in regional business activity.
The increase came as a surprise to economists, who had expected the business barometer to dip to a reading of 60.0. The unexpected increase lifted the barometer to its highest level in a year.
A significant improvement in new orders growth contributed to the increase by the business barometer, with the new orders index jumping to a one-year high of 73.6.
The production index also rebounded following a sharp drop in the previous month, while the employment index rose to its highest level since last November.
Meanwhile, the inventories index pulled back off the 41-year high seen in September, but MNI Indicators said it still points to a continued stock build in line with strong sales forecasts.
The prices paid index fell below the average seen over the past year, reflecting the recent decline in crude oil prices.
Philip Uglow, Chief Economist of MNI Indicators said, "The strengthening in the Chicago Business Barometer suggests that the US economic recovery is more entrenched. The October survey also provided clearer evidence that companies are taking on more workers to keep up with higher demand."
"Concerns about the global economy and the continued low level of inflationary pressures may persuade the Fed to keep rates lower for longer, but the domestic economy is growing healthily," he added.
Next Monday, the Institute for Supply Management is scheduled to release a separate report on national manufacturing activity in the month of October.
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