The Institute's Chicago Business Barometer climbed to 71.2, which marks the index's highest reading in over two decades. Nonetheless, the same indicator also showed that there was slower growth in the region's labor market and that inflationary pressures were starting to mount. In January, the index registered a 68.8; a survey of economists had predicted a median reading of 67.4.
The U.S. job market has been slow to recover from the recession, and some economists contend the Federal Reserve's loose monetary policy could put additional inflationary pressures on the nascent economic recovery in the U.S.
Moreover, ISM-Chicago's production index rose for the sixth consecutive month; for February, the reading hit 78.2, up from 73.7 in January. New orders also reached their highest levels since December 1983 at 75.9 in February, up from 75.7 the month prior. Order backlogs, which are a good indicator of pent-up industrial demand, jumped to their highest levels since July 1994 at 61.8.