Chicago business activity up for second straight month

The area saw expansion again after over two years of decline.

Chicago business activity expanded in February for the second straight month, according to the Chicago Business Barometer.

The metro area scored of 57.7 for the month, up from 54.0 in January. A score below 50 indicates decline.

The expansion comes after 25 consecutive months of decline, from December 2023 through December 2025.

February’s rebound in activity was driven by an increase in employment, which expanded among the industries surveyed for the first time since November 2023. That payroll expansion is a significant turnaround from December 2025, when the index registered the lowest employment activity since 2009.

The barometer surveys supply chain professionals across industries on a range of factors, including:

• New orders
• Inventories
• Production
• Employment
• Supplier deliveries

The survey asks businesses whether they’ve seen increases, decreases or no change in these factors at their companies. It then calculates an overall indicator of the health of Chicago’s economy.

After 25 months of contraction, the baseline for achieving expansion is lower, making an overall expansionary score easier to achieve relative to previous month. That’s especially true for the months following a long decline.

Increases in employment, new orders, supplier deliveries and production drove the overall expansion. Order backlogs declined, and inventories returned to contracting.

The Chicago-area employment situation remains problematic. The local unemployment rate was 4.5% in December, above the 4.1% national rate.

The area’s rate was 4.1% in September. Chicago’s unemployment rate has been higher than the nation’s since December 2019, when the local rate of 3.0% was below the national rate of 3.6%.

The Chicago area gained 28,500 jobs from December 2024 to December 2025. Government employment increased by 17,800 and education and health services by 23,200 during that time. Trade, transportation, and utilities lost 10,000 jobs, and manufacturing lost 8,100.

The information sector remained a bright spot, with 2,900 jobs, driven by Chicago’s status as the country’s No. 4 tech hub.

Chicago-area unemployment would be higher if more people were looking for work. Illinois’ labor force participation rate declined from 65.1% in December 2024 to 63.8% in December 2025. Over that time the national rate remained stable, declining by only 0.1 percentage points to 62.4%. In 2025, more than 108,000 Illinoisans left the workforce.

To expand business activity more regularly, Chicago and the state need to focus on pro-growth policies such as:

• Ensuring the Chicago-area tech sector can continue to thrive by deepening the area’s tech talent pool and ensuring tech companies can meet their energy needs.
• Establishing fiscal stability. Research shows that is a prerequisite for economic growth and essential for attracting private investment and expanding the tax base.
• Simplifying the tax code to make it easier for businesses to operate and grow.
• Reducing corporate property taxes, which are the highest among large cities and more than double the average, according to a recent report.    

Although Chicago politicians have a long history of imposing high taxes, recent years have seen new taxes proposed and enacted that raise the city’s takes to another level. One unsuccessful proposal was a head tax of $33 per employee for businesses over 500 people. The city avoided this the job-killing tax, but it did increase the tax on cloud-based computer services to 15% from 11%.

To sustain business expansion, Chicago must make it easier for companies to grow, not enact more harmful taxation that could return business activity to decline.