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Economy in Brief

Chicago Purchasing Managers Index Slows, Still Positive
by Carol Stone, CBE  December 30, 2016

The Chicago Purchasing Managers Business Barometer Index decreased to 54.6 in December following a jump to 57.6 during November. The December figure compared to expectations for a smaller drop to 56.5 in the Action Economics Forecast Survey. For all of 2016, the barometer averaged 53.1, up from 50.3 in 2015. Readings above 50 indicate growth, while those below 50 show declines in activity levels.

Haver Analytics constructs an ISM-Adjusted Index using the Chicago numbers, comparable to the overall ISM index to be released January 3. The Haver figure slowed to 53.1 from November's 56.4. During the last ten years, there has been a 61% correlation between this adjusted Chicago Purchasing Managers index and real GDP growth.

The new orders series, which had jumped almost 11 points in November to 63.2, backed off to 56.5 for December. Consequently, order backlogs retreated markedly, to 42.6 from 52.8. Inventories also fell, to 46.0 from 56.1. The production series, however, changed little, just edging down to 58.5 from 59.1.

The employment figure was unchanged for December at November's 49.7. During the last ten years, there has been an 81% correlation between the employment figure and the m/m change in factory sector employment. Supplier deliveries were the only activity component to increase, rising to 54.7 from 53.9.

The prices paid reading increased to 58.0 from 56.8. For all of 2016, prices were noticeably firmer, at 53.2 versus 46.8 in 2015.

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. Summary data are contained in Haver's USECON database, with detail, including the ISM-style index, in the SURVEYS database. The Consensus expectations figure is available in AS1REPNA.

Chicago Purchasing Managers Index (%, SA) Dec Nov Oct Dec '15 2016 2015 2014
ISM-Adjusted General Business Barometer 53.1 56.4 51.0 46.8 52.0 51.6 59.3
General Business Barometer 54.6 57.6 50.6 42.9 53.1 50.3 60.7
  Production 58.5 59.1 54.4 46.6 54.7 52.5 64.5
  New Orders 56.5 63.2 52.5 38.6 55.7 50.4 63.8
  Order Backlogs 42.6 52.8 44.4 29.4 47.4 44.4 54.2
  Inventories 46.0 56.1 45.9 48.9 47.3 52.1 55.9
  Employment 49.7 49.7 51.1 46.4 49.4 50.3 56.0
  Supplier Deliveries 54.7 53.9 51.2 53.7 52.8 52.5 56.5
  Prices Paid 58.0 56.8 59.5 45.6 53.2 46.8 61.0
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