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Economy in Brief

Chicago Purchasing Managers Index Declines, but Prices Firm
by Tom Moeller  January 31, 2017

The Chicago Purchasing Managers Business Barometer Index declined to 50.3 in January after a fall to 53.9 in December. The latest figure was the lowest since May. The January reading disappointed expectations for 55.0 in the Action Economics Forecast Survey. Last year's figures were revised due to new seasonal factors. 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 tomorrow. The Haver figure fell to 50.0, also the lowest reading since May. 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 deteriorated sharply to 49.1, the lowest level since December 2015. In addition, the production and inventories series fell, but the order backlogs and supplier deliveries indexes rose.

The employment reading declined to 46.5, the lowest level since June. Just 14% (NSA) of respondents reported higher payroll levels while 22% reported them lower. During the last ten years, there has been a 74% correlation between the employment index and the m/m change in nonfarm payrolls.

The prices paid index rose to 61.4, the highest level since September 2014. Thirty percent of respondents paid higher prices compared to 7% in January 2016. Nine percent paid lower prices compared to 19 percent one year earlier.

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) Jan Dec Nov Jan '16 2016 2015 2014
General Business Barometer 50.3 53.9 57.2 55.0 53.1 50.3 60.7
ISM-Adjusted General Business Barometer 50.0 53.0 55.9 52.9 52.0 51.6 59.3
  Production 56.0 58.3 58.0 64.3 54.7 52.5 64.5
  New Orders 49.1 56.9 62.9 57.5 55.7 50.4 63.8
  Order Backlogs 45.6 43.2 52.9 47.4 47.4 44.4 54.2
  Inventories 43.1 45.8 55.5 44.6 47.3 52.1 55.9
  Employment 46.5 49.8 49.7 48.6 49.4 50.3 56.0
  Supplier Deliveries 55.1 54.1 53.5 49.7 52.8 52.5 56.5
  Prices Paid 61.4 58.1 57.0 44.9 53.2 46.8 61.0
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