Two new Federal Reserve Bank of Chicago reports point to a Midwest economy picking up speed, driven by factories rather than service businesses. The national activity index rose to 0.07 in September. The bank’s regional survey climbed to +6 in October, with manufacturing at +45 while nonmanufacturing stayed negative at -14.
Key Takeaways
- The Chicago Fed National Activity Index rose to 0.07 in September from a revised -0.08 in August. That signals national growth slightly above its historical trend.
- The Chicago Fed Survey of Economic Conditions activity index rose to +6 in October from -4 in September, which the bank describes as growth near trend.
- Manufacturing activity among surveyed Midwest businesses jumped to +45 from +24.
- Nonmanufacturing activity improved to -14 from -20 but remains below average.
- Both the current and planned hiring indexes in the regional survey stayed negative.
Chicago Fed National Activity Index Turns Positive in September
The Federal Reserve Bank of Chicago released its September national activity index on Monday, October 26. The index combines 85 monthly indicators of U.S. economic activity into a single number. A reading of zero means the economy is growing at its long-run average pace. Positive readings mean faster growth, and negative readings mean slower growth.
The index rose to 0.07 in September after a revised reading of -0.08 in August. Its three-month average rose to 0.03 from 0.01. Indicators tied to production and income led the gain, and sales, orders and inventories also added to it. Employment-related indicators were neutral. The personal consumption and housing category pulled the index down.
That breakdown matters for readers in Chicago. The national gain came mostly from making and selling goods, not from consumers spending more or from hiring.
Midwest Economy Picks Up in October, Led by Factories
The Chicago Fed’s regional survey, released October 22, shows a similar picture closer to home. The Chicago Fed Survey of Economic Conditions asks business contacts across the bank’s district, which spans Illinois, Indiana, Iowa, Michigan and Wisconsin, to rate conditions at their own firms. Each answer is compared with that firm’s own history. The index runs from -100 to +100, and zero means average growth.
The overall activity index rose to +6 in October from -4 in September. The Chicago Fed describes that level as growth near trend. After a below-average September, Midwest economy news turned modestly positive.
Manufacturing in the Midwest Outpaces Service Businesses
The gap between sectors is the most striking part of the October survey. The manufacturing activity index nearly doubled, rising to +45 from +24. That means a clear majority of factory respondents reported above-average activity at their firms. Manufacturing in the Midwest has long anchored the region’s economy, and this year’s manufacturing technology show at McCormick Place showed how much of that industrial base still runs through Chicago.
Service businesses tell a different story. The nonmanufacturing index improved to -14 from -20 but stayed below zero. That category covers a wide range of employers, from retailers and restaurants to professional and business services. The economy of the Midwest is therefore running at two speeds: factories are reporting strong activity, while much of the service sector is still recovering from a softer stretch.
Hiring Remains Below Average as Activity Improves
Stronger activity has not yet turned into hiring. According to the Chicago Fed, the pace of current hiring among survey respondents slowed in October. Expectations for hiring over the next 12 months improved, but both hiring indexes remained negative.
Other parts of the survey point the same way. Respondents’ outlook for the U.S. economy over the next 12 months slipped slightly, and 31 percent expected economic activity to increase. Plans for capital spending, meaning investment in equipment, buildings and similar assets, eased but stayed positive. Labor and nonlabor cost pressures both declined and remained below average.
What the Numbers Mean for Chicago-Area Workers and Employers
For employers, the survey suggests demand is improving, especially for goods, while costs are easing. That combination can give businesses room to plan, though many appear to be waiting before adding staff.
For workers, the message is mixed. Growth in the economy in the Midwest is real, but hiring remains below its usual pace. Factory workers may see more stable conditions sooner than service workers, given the gap in activity between the two sectors. Job seekers should expect a cautious hiring market through the end of the year, even as business activity improves.
What to Watch Next in Midwest Economy News
The Chicago Fed publishes its next labor market indicators on Thursday, October 29. Those will show whether employment data catches up with the gains in activity. The October national activity index follows on November 23. Together, the releases will show whether the factory-led rebound spreads into services and hiring heading into 2027.
FAQs
How Is the Economy of the Midwest Changing?
Midwest economic activity improved in October, rising to near-trend growth according to the Chicago Fed’s regional survey. Manufacturing is driving the gain, while service businesses and hiring remain below average.
What Is the Chicago Fed National Activity Index?
The Chicago Fed National Activity Index is a monthly measure built from 85 indicators of U.S. economic activity. A reading of zero means the economy is growing at its historical average rate, and the index stood at 0.07 in September 2026.
What Is the Chicago Fed Survey of Economic Conditions?
The Chicago Fed Survey of Economic Conditions is a monthly survey of business contacts across Illinois, Indiana, Iowa, Michigan and Wisconsin. It measures activity, hiring, capital spending and cost pressures against each firm’s own historical average.
