Midwest Manufacturing Growth Slowed in December

Business activity across the Midwest rose at a slower pace in December, driven by declines in both new orders and backlogs.

The Chicago Business Barometer, also known as the Chicago PMI, fell to 54.6 in December from 57.6 in November. The index remained above the 50 mark, which separates expansion from contraction.

Economists surveyed by The Wall Street Journal expected the gauge to come in at 57.5.

The Chicago reading is one of several monthly regional surveys meant to measure the health of U.S. production. The Chicago report is slightly different from the others in that it includes some firms from the bigger and better-faring service sector and because it isn't conducted by a Federal Reserve bank. The index is known to be a volatile one, in part because it is influenced by swings in Boeing orders.

This month, the survey was lead by a slowdown in new orders and production. Backlogs returned to contraction territory while employment remained there. Supplier deliveries was the only component to increase in the month.

Businesses surveyed said they were hopeful about the impact of the incoming Trump administration's policies, citing anticipated tax reforms and deregulation. A majority of the businesses surveyed said they expected a positive impact from Trump administration policies while 9% said they anticipated a negative impact.

Write to Austen Hufford at austen.hufford@wsj.com