Business activity in the U.S. Midwest expanded in December, a report showed on Friday, boosted by a rebound in customer demand.

But the pace of hiring in the sector was the slowest it has been in more than three years.

The Institute for Supply Management-Chicago business barometer rose to 51.6 from 50.4. Economists polled by Reuters had expected a reading of 51.0.

A reading above 50 indicates expansion in the regional economy.

The forward-looking new orders gauge rebounded to 54.0 after slipping to a more than three-year low of 45.3 in November.

Employment, however, dropped to 45.9 in December, the lowest since November 2009. It stood at 55.2 last month.

(Reporting By Steven C. Johnson; Editing by Chizu Nomiyama)