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Economy in Brief

Chicago Purchasing Managers Index Plummets
by Tom Moeller  February 27, 2015

Chicago purchasing managers indicated that their February Business Barometer Index dropped sharply to 45.8 this month from an unrevised 59.4 in January. Severe winter weather and a West Coast port strike were sited by the Purchasing Managers Association as having depressed activity. The reading was the lowest since September 2009 and fell short of expectations for 58.2 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 48.3, also the lowest level since September 2009. During the last ten years, there has been a 62% correlation between the adjusted Chicago Purchasing Managers index and real GDP growth.

Most of the component series were under pressure last month. The new orders index fell the most to 42.0 and was well below the high of 70.8 in May. The production series also fell sharply to 44.8, the lowest level since July 2009. The order backlog figure also fell hard to 41.1 and was under the 59.6 high last May. Employment dropped to 49.8, the lowest level since April 2013. During the last ten years, there has been an 82% correlation between the employment figure and the m/m change factory sector employment. Offsetting these declines was a modest rise in inventories to 46.7. The supplier delivery index also rose to 58.3, indicating a slowdown in delivery speeds.

The index of prices paid bounced up slightly to 47.8 but remained at the lowest point since the end of the recession in 2009. Sixteen percent (NSA) of respondents reported paying higher prices, the same percentage reporting paying 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) Feb Jan Dec Feb'14 2014 2013 2012
ISM-Adjusted General Business Barometer 48.3 56.2 58.5 57.7 59.4 54.3 54.8
General Business Barometer 45.8 59.4 58.8 59.5 60.7 56.1 54.6
  Production 44.8 64.1 62.7 59.7 64.5 58.3 57.6
  New Orders 42.0 61.6 59.8 62.7 63.8 59.2 55.1
  Order Backlogs 41.1 51.9 48.0 55.0 54.2 48.9 48.0
  Inventories 46.7 40.1 55.5 51.5 56.0 45.7 51.4
  Employment 49.8 60.1 56.4 57.8 56.0 55.6 55.3
  Supplier Deliveries 58.3 54.9 58.3 56.7 56.5 52.5 54.9
  Prices Paid 47.8 44.2 58.1 59.5 61.0 59.9 62.2
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