Chicago business activity returns to contraction

The area resumed a long decline in April after three months of modest expansion.

Chicago-area business activity contracted in April, resuming a long-term decline after three months of expansion, according to the Chicago Business Barometer.

The metro area scored 49.2 for the month, down from 52.8 in March. A score below 50 indicates decline.

The return to business activity contraction is particularly worrying because after 25 consecutive months of contraction from December 2023 to December 2025, the baseline for achieving an overall expansionary score is much lower.

To support business expansion, Chicago needs to focus on pro-growth policies such as like ensuring enough workers with the right skills and creating a lower-tax environment where businesses can thrive.

April’s activity contraction was driven by a reduction in order backlogs, new orders, supplier deliveries and production. While employment improved from March, it remained below 50, signaling continued contraction in work opportunities.

The barometer surveys supply chain professionals across industries on a range of factors, including new orders, production, employment and supplier deliveries

The Chicago-area employment situation remains problematic. The local unemployment rate was 5.0% in March 2026, compared to a national rate of 4.3%. Chicago’s unemployment rate has been higher than the nation’s since January 2020.

The Chicago area gained only 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 in the Chicago area, driven by it status as the country’s No. 4 tech hub. While neighboring states have been losing information sector jobs, Illinois as a whole added 4,500 in 2025.

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 raised the city’s take to another level. Chicago increased the tax on cloud-based computer services to 15% from 11%. The city also increased hotel taxes in March to 19%, the highest in the nation. That increase could stunt tourism.

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.