The regional business index reached an 18-month peak in October at 65.9. It fell to 63 in November and eased back to 59.1 in December, said the Institute for Supply Management, which releases the report in a partnership with the Deutsche Borse Group.
The business index that covers Illinois, Indiana and Michigan, saw declines in new orders for the second consecutive month.
Gains were posted in new orders, production and order backlogs, but at a slower pace than the previous month. The employment index "fell significantly to just above 50 [the break-even point between growth and contraction] in December," the report said.
Taking a long view, the index indicates and improved business climate in the area, said MNI Indicators Chief Economist Philip Uglow.
"The Chicago Business Barometer finally turned a corner in 2013 having been in decline for the previous two years and ended the year with fourth quarter growth at the highest for more than two years," he said.
He noted that business activity "dipped a little" in December, but growth in production and fresh orders remained "firm," he said.