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Economy in Brief

Chicago Purchasing Managers Index Rebounds Sharply
by Peter D'Antonio  May 31, 2018

The Chicago Purchasing Managers Business Barometer rebounded sharply in May, with the index reaching 62.7 following readings near 57.5 in March and April. The Action Economics Forecast Survey had anticipated only a modest rise to 58.1. The Chicago Purchasing Managers figures are diffusion indexes where readings above 50 indicate growth.

Haver Analytics constructs an ISM-Adjusted index (combining Chicago-area new orders, production, employment, supplier deliveries, and inventories) with similar methodology as the ISM Composite Index. This index increased by 3.1 points to 60.9, which is consistent with healthy economic growth.

The rise in the overall Chicago index reflected solid gains in several components. Production reversed the previous two month slide by rising 6.0 points to a healthy 65.0. New orders similarly bounced back to 63.5. However, the biggest rebound occurred in order backlogs, which jumped 11.0 points to 60.7. Order backlog readings above 60 are rare. Meanwhile, delivery times remained slow (a positive indicator for growth) with a reading of 66.4.

Rebounds in the employment and inventory indexes were more muted. In terms of jobs, twenty-four percent of firms (NSA) reported more workers, while only fourteen percent reported fewer.

The prices paid measure edged down slightly in May, but remained very high at 77.1. Readings in the past two months have been the highest since 2011. Fifty-six percent of purchasing managers reported paying higher prices, while only two percent paid lower prices. This skewed result probably reflected the recent rise in energy prices.

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%. 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) May Apr Mar May '17 2017 2016 2015
General Business Barometer 62.7 57.6 57.4 59.3 60.8 53.1 50.3
ISM-Adjusted General Business Barometer 60.9 57.8 59.3 59.0 59.0 52.0 51.6
  Production 65.0 59.0 55.2 62.7 64.3 54.7 52.5
  New Orders 63.5 58.0 58.6 62.2 63.5 55.7 50.4
  Order Backlogs 60.7 49.7 50.7 52.0 55.2 47.2 44.4
  Inventories 54.9 53.8 59.5 55.2 54.9 47.2 52.1
  Employment 54.7 52.1 59.4 55.9 52.9 49.4 50.3
  Supplier Deliveries 66.4 66.0 63.8 59.1 59.4 52.8 52.6
  Prices Paid 71.5 75.9 69.9 58.2 64.0 53.2 46.8
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