Chicago-region businesses improve in December, but they’re still struggling to grow

The numbers: The economy in the Midwest improved in December for the second month in a row, but the region is still suffering from a trade war with China that’s hurt farmers and manufacturers, according to a regional survey.

The Chicago Purchasing Management Index rose to 48.9 this month from a revised 46.2 in November and 43.2 in October. The October reading was the weakest since the end of 2015.

Although the latest reading was a bit better than Wall Street expected, the index still shows the economy in the Greater Chicago area is contracting. Any reading below 50 indicates deteriorating conditions.

What happened: New orders and employment fell at an even faster pace compared to the prior month, but those negatives were largely offset by improved but still soft production numbers.

Big picture: Farmers and manufacturers have borne the brunt of the trade war with China, suffering from declining or irregular demand or higher prices for raw materials. The Midwestern economy is especially dependent on agricultural and heavy industry.

The much larger service side of the economy, however, has kept the U.S. growing at a steady if unspectacular pace, leavened by strong consumer spending. Consumers are still confident in the economy with unemployment and layoffs at half-century lows.