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Economy in Brief

Chicago Purchasing Managers Index Increases; Pricing Power Strengthens
by Tom Moeller  July 31, 2018

The Chicago Purchasing Managers Business Barometer increased to 65.5 during July from June's unrevised 64.1. It was the highest level in six months, continuing its sharply rising trend during the last three years. The Action Economics Forecast Survey expected a decline to 62.0. The Chicago Purchasing Managers figures are diffusion indexes and readings above 50 indicate growth.

Haver Analytics constructs an ISM-Adjusted index with similar methodology as the ISM Composite Index. This index eased to 60.8 from 61.1 during June. During the last ten years, there has been a 67% correlation between the index level and the q/q change in real GDP.

The rise in the overall business barometer reflected improvement amongst most of the component series. The order backlog series strengthened to the highest level since October. The new orders and production xseries also gained but the vendor delivery series eased. The inventories series fell sharply to the lowest point since January 2017.

The employment component rose to a four month high. During the last ten years, there has been a 75% correlation between the index level and the m/m change in factory sector payrolls. Thirty-one percent of survey respondents reported higher payroll levels and 12% indicated a decline.

The index of prices paid increased to 82.1, its highest level since September 2008. Sixty-four percent of respondents reported higher prices, a seven-year high, while two percent reported price declines.

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) Jul Jun May Jul '17 2017 2016 2015
General Business Barometer 65.5 64.1 62.7 59.5 60.8 53.1 50.3
ISM-Adjusted General Business Barometer 60.8 61.1 60.9 58.2 59.0 52.0 51.6
  Production 68.1 64.6 65.0 61.6 64.3 54.7 52.5
  New Orders 65.9 65.4 63.5 61.0 63.5 55.7 50.4
  Order Backlogs 65.3 64.4 60.7 57.5 55.2 47.2 44.4
  Inventories 45.3 52.8 54.9 54.6 54.9 47.2 52.1
  Employment 58.3 55.2 54.7 52.8 52.9 49.4 50.3
  Supplier Deliveries 66.6 67.5 66.4 60.9 59.4 52.8 52.6
  Prices Paid 82.1 76.3 71.5 61.2 64.0 53.2 46.8
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