Midwest Manufacturing Slips Deeper into Contraction

An index measuring the economy of the Midwest fell to its lowest level in December since July 2009, underscoring the extent to which manufacturing has become a drag, especially in the manufacturing-heavy Midwest. The Chicago Business Barometer, commonly known as the Chicago PMI, shrank to 42.9 this month from 48.7 in the prior one. Readings below 50 indicate contraction. The barometer's measurement of new orders fell to the lowest level since May 2009, indicating that business in the pipeline for some manufacturers is also slowing. The barometer had a "particularly volatile year," according to Philip Uglow, chief economist of MNI Indicators, which publishes the report. The weakness in the report "lends weight to the Fed's gradual approach to tightening, with the flexibility to change direction if needed," Mr. Uglow said. A special question in this month's report showed that 55.1% of respondents expect demand to strengthen in 2016, compared to 14.3% who think it will lower. Write to Josh Zumbrun at Josh.Zumbrun@wsj.com