Chicago-area business activity took an unexpected turn in May as the Chicago Business Barometer indicated a faster contraction, according to a report by MNI Indicators released on Friday. The business barometer fell to 35.4 in May from 37.9 in April, signaling a decline in business conditions. Economists had anticipated a rise to 41.0, making this downturn a surprise for many.

This decline marks the lowest level the Chicago business barometer has seen since May 2020. The sharp drop in the new orders index, down by 9.2 points, contributed significantly to this contraction. Additionally, the order backlogs index and the employment index also experienced decreases, reaching their lowest levels since May 2020 and June 2020, respectively.

On a more positive note, the production index saw a notable increase of 8.1 points, breaking a five-month decline streak and reaching its highest level since January. Despite this, the prices paid index saw a slight decrease of 0.9 points, though it remains at the second-highest level since August 2023.

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