Business activity in the Midwest slowed in December, with the Chicago Purchasing Manager’s Index (PMI) falling to 54.6 from 57.6 in the prior month.
It had been forecast to fall to 56.8.
Big declines in new orders and backlogs led to the drop in the headline index. Production also fell, while employment remained in contraction but was little changed from November.
“Most respondents to our survey remain upbeat about the fate of their business as we head into 2017, buoyed by fresh hope of better things to come under the new administration,” said Jamie Satchithanantham, an economist at MNI Indicators.
About half of the survey respondents said they expect their businesses to grow because of the new administration’s policies. Forty per cent said there would be no impact, and 9% foresaw a decline.
The potential drag from the stronger dollar and support from rising oil prices could become bigger themes for manufacturers in the new year.