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Economy in Brief

Chicago Purchasing Managers Index Declines Unexpectedly
by Tom Moeller  May 31, 2016

Chicago purchasing managers reported that their Business Barometer Index fell to 49.3 this month following a decline to 50.4 in April. The latest reading disappointed expectations for 50.5 in the Action Economics Forecast Survey. The figure has moved erratically sideways since early last year.

Haver Analytics constructs an ISM-Adjusted Index using the Chicago numbers, comparable to the overall ISM index to be released tomorrow. Our figure fell to 48.0, and also has been moving sideways for a year. During the last ten years, there has been a 61% correlation between the adjusted Chicago Purchasing Managers index and real GDP growth.

Declines in the component series were wide spread. The production series fell to 47.4, its lowest level in three months, while new orders were off to 48.8, its lowest level this year. The inventory index, at 37.9, indicated the fastest speed of decumulation since November 2009. The supplier delivery index held steady at 57.8, suggesting the slowest delivery speeds since October 2014.

The employment figure increased to 48.3, but made up just a piece of its April decline. It remained below the 2014 highs. During the last ten years, there has been an 81% correlation between the employment figure and the m/m change in factory sector employment.

The prices paid reading eased to 56.5 following a jump in April to 56.9, the highest level since November 2014. An increased 24% (NSA) of respondents reported paying higher prices while a notably lessened 4% 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) May Apr Mar May '15 2015 2014 2013
ISM-Adjusted General Business Barometer 48.0 52.0 50.8 50.4 51.6 59.3 54.2
General Business Barometer 49.3 50.4 53.6 48.7 50.3 60.7 56.0
  Production 47.4 54.0 53.7 50.1 52.5 64.5 58.2
  New Orders 48.8 51.0 55.6 48.9 50.4 63.8 59.1
  Order Backlogs 47.7 38.7 49.7 46.7 44.4 54.2 48.8
  Inventories 37.9 49.6 44.0 53.9 52.1 55.9 45.6
  Employment 48.3 47.5 52.8 48.9 50.3 56.0 55.6
  Supplier Deliveries 57.8 57.8 48.1 50.4 52.5 56.5 52.5
  Prices Paid 56.5 56.9 45.1 50.0 46.8 61.0 59.8
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