Reflecting a notable acceleration in the pace of production growth, MNI Indicators released a report on Friday showing Chicago-area business activity grew at a much faster than expected rate in the month of September.

MNI Indicators said its Chicago business barometer jumped to 54.2 in September from 51.5 in August, with a reading above 50 indicating growth in regional business activity. Economists had expected the index to inch up to 52.0.

The bigger than expected increase by the barometer was driven by a sharp increase by the production index, which surged up by 7.3 points to 59.8, its highest level since January.

Meanwhile, the new orders and order backlogs indexes were little changed in September after leading the barometer's decline in August, with the latter failing to bounce back above the 50 breakeven level.

The report also said the employment index pulled back in September after rallying to a sixteen-month high in August.

"Economic growth in the U.S. appears to have picked up a little at the end of the third quarter and although the employment component fell, this was on the back of a relatively strong showing in the previous month," said Lorena Castellanos, senior economist at MNI Indicators. She added, "Note employment usually lags changes in orders and output, so it was not that surprising to see this component weakening in September."

On the inflation front, the report said the prices paid index rose slightly in September, indicating early signs of pipeline inflationary pressures after four consecutive monthly decreases left the indicator at a five-month low.

MNI Indicators noted 79 percent of Chicago panelists said the run-up to presidential election in November is having a negligible impact on business.

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