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Economy in Brief

Chicago Purchasing Managers Index Remains Below Break-Even
by Tom Moeller  June 30, 2015

Chicago purchasing managers reported that their June Business Barometer Index improved to 49.4 during June following an unrevised decline to 46.2 in May. It was fourth month in the last five below 50, the break-even point between rising and falling business activity. It disappointed expectations for 50.0 in the Action Economics Forecast Survey. Haver Analytics constructs an ISM-Adjusted Index using the Chicago numbers, comparable to the overall ISM index to be released tomorrow. Our figure deteriorated to 48.5, the third month below 50 this year. During the last ten years, there has been a 61% correlation between the adjusted Chicago Purchasing Managers index and real GDP growth.

The production series improved slightly, as did new orders. Both remained above the recovery low. Moving the other way, the employment reading declined sharply to the lowest level since November 2009. During the last ten years, there has been an 82% correlation between the employment figure and the m/m change factory sector employment. The order backlog and inventory readings also fell sharply. Finally, the vendor deliveries series fell, indicating the fastest rate of product delivery in two years.

The index of prices paid improved to the highest level in six months. A higher 21 percent (NSA) of respondents paid higher prices, more than an increased 17 percent which 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 with 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) Jun May Apr Jun'14 2014 2013 2012
ISM-Adjusted General Business Barometer 48.5 48.8 53.6 60.5 59.4 54.3 54.8
General Business Barometer 49.4 46.2 52.3 63.5 60.7 56.0 54.7
  Production 49.8 45.8 52.7 69.6 64.5 58.2 57.6
  New Orders 51.7 47.5 55.1 66.0 63.8 59.0 55.2
  Order Backlogs 41.0 47.3 48.5 56.7 54.2 48.8 48.1
  Inventories 46.9 53.3 54.2 56.4 56.0 45.7 51.4
  Employment 45.7 48.0 54.0 57.1 56.1 55.5 55.4
  Supplier Deliveries 48.5 49.5 51.9 53.6 56.5 52.5 54.8
  Prices Paid 53.3 51.2 43.1 64.5 61.0 59.8 62.3
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