Chicago purchasing managers reported that their July Business Barometer Index improved to 54.7 following an unrevised rise to 49.4 in June. It was first month in the last three above the break-even level of 50 and the highest level since January. It beat 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 Monday. Our figure increased to 53.7, also the highest level since January. During the last ten years, there has been a 61% correlation between the adjusted Chicago Purchasing Managers index and real GDP growth.

A rebounding production series led the overall index higher while new orders gained significantly. The order backlog and inventory series also improved. The employment reading ticked slightly higher but remained near 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 in factory sector employment. Finally, the vendor deliveries series was fairly stable, still indicating the fastest rate of product delivery in two years.

The index of prices paid improved to the highest level since December. An easier 17 percent (NSA) of respondents paid higher prices and 14 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 with the ISM methodology. The figures can be found in Haver's SURVEYS database. The Consensus expectations figure is available in AS1REPNA.