CHICAGO, November 2, 2026 – In October, the pace of manufacturing activities in Chicago slowed down but not by much because Chicago’s purchasing managers’ index, also referred to as Chicago Business Barometer, declined by 3.5 to a level of 55.3 against September when the index was at 58.8 and below expectation of economists who anticipated the figure of 56.1 for that month.
Nevertheless, a figure above 50 indicates economic growth, so October’s figure doesn’t denote any collapse, but only a slowdown, and the question is whether it’ll last in coming months.
What the number says
The index, which is prepared by MNI Indicators and the Chicago Institute for Supply Management, reflects the opinions of purchasing managers at regional companies. These purchasing managers are usually the first to detect any changes in orders, production schedules, supplier problems, and employment plans long before these data become available in GDP figures.
In October, the 55.3 reading was the second straight reading above 50. This is important because it shows that businesses in Chicago region are still growing, but the pace is slower than in September.
Behind the decline
The decrease was primarily attributable to a decline in supplier deliveries, which decreased by 10.3 points. On the surface, that sounds like negative data; however, that is not necessarily the case. In PMI methodology, slower supplier deliveries will raise the overall index while faster supplier deliveries will lower the component. In simpler terms, some of the decrease in October may be attributed to efficient supply chains rather than lack of demand.
Output also decreased, decreasing by 5.2 points; however, output remained in positive territory for the second straight month. Employment saw the opposite result; in October, the employment component increased by 10.3 points to its highest level since April 2021.
Thus, there is mixed data. Companies are producing less than they were last month, but are hiring at an increased rate. Such a situation can occur if companies see sustained demand ahead or are merely making up for lost hiring time.
Why markets care
Chicago provides a timely insight into America’s manufacturing heartland. Whenever factories, logistics companies, and manufacturers in the area experience a slowdown, people start to listen up, as it could indicate something about what is going on concerning the pace of production, employment growth and investments in business.
For the markets, Chicago confirms a “slower, but intact” story when it comes to the US economy. The pace of growth is definitely there, but it has slowed down.
One should also note an increase in labor costs for this story. It has been reported by the US Bureau of Labor Statistics that its Employment Cost Index increased by 0.8 per cent in the third quarter of this year, as was expected, compared to 0.9 per cent seen previously.
If the growth in job hiring continues, then manufacturers could continue facing the issue of competing for skilled laborers.
What to watch next
There are still some unanswered questions in the October survey. Since it lacked the reading for new orders, it could be impossible to tell whether the downturn was caused by weakening customer demand or just by problems within the company.
It’ll become evident next month. The return of the indicator above 58.8 would mean that October’s figures were just a fluke, while its drop below 50 would mean a contraction.
Right now, the economy in Chicago is growing, but not as confidently as before. And in an economy this vulnerable to interest rates, supply chain issues, and labor costs, the 3.5 drop in the figure must be considered seriously.
