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Economy in Brief

Chicago Purchasing Managers Index Remains Weak; Prices Collapse
by Tom Moeller  January 30, 2015

Chicago purchasing managers indicated that their January Business Barometer Index ticked higher to 59.4 but remained down from 64.5 reached three months ago. The reading fell short of expectations for 57.9 in the Action Economics Forecast Survey. Haver Analytics constructs an ISM-Adjusted Index, comparable to the overall ISM index to be released Monday. Our figure declined to 56.2, the lowest level in six months. During the last ten years, there has been a 62% correlation between the adjusted Chicago Purchasing Managers index and real GDP growth.

The new orders index improved slightly to 61.6 but remained well below the high of 70.8 in May. The order backlog figure also rose to 51.9 and remained under the 59.6 high last May. Employment improved to 60.1, its highest level since November 2013. During the last ten years, there has been an 82% correlation between the employment figure and the m/m change factory sector employment. The production series also improved moderately. Offsetting these gains was a collapse in the inventories number to 40.1, its lowest level since July 2013. The supplier delivery index also fell to 54.9, indicating the quickest delivery speeds in six months.

The index of prices paid collapsed to 44.2, the lowest point since the end of the recession in 2009. Only 11 percent (NSA) of respondents reported paying higher prices while 22 percent paid less.

The MNI Chicago Report is produced by MNI/Deutsche Borse Group in partnership with ISM-Chicago. The survey covers a sample of over 200 purchasing professionals in the Chicago area with a monthly response rate of about 50%. The ISM-Adjusted headline index is calculated by Haver Analytics using these data to construct a figure using the ISM methodology. The figures can be found in Haver's SURVEYS database. The Consensus expectations figure is available in AS1REPNA.

Chicago Purchasing Managers Index (%, SA) Jan Dec Nov Jan'14 2014 2013 2012
ISM-Adjusted General Business Barometer 56.2 58.5 60.7 57.0 59.4 54.3 54.8
General Business Barometer 59.4 58.8 60.7 60.1 60.7 56.1 54.6
  Production 64.1 62.7 66.2 61.4 64.5 58.3 57.6
  New Orders 61.6 59.8 61.6 64.3 63.8 59.2 55.1
  Order Backlogs 51.9 48.0 52.3 57.6 54.2 48.9 48.0
  Inventories 40.1 55.5 61.4 51.0 56.0 45.7 51.4
  Employment 60.1 56.4 56.3 53.4 56.0 55.6 55.3
  Supplier Deliveries 54.9 58.3 58.0 55.1 56.5 52.5 54.9
  Prices Paid 44.2 58.1 59.6 64.0 61.0 59.9 62.2
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