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Economy in Brief

U.S. Chicago Business Barometer Remains Robust
by Peter D'Antonio  December 28, 2018

The Chicago Purchasing Managers Business Barometer remained at an elevated level of 65.4 in December after surging to 66.4 in November. Chicago Business Survey readings in the mid-60s are unusual and reflect a strong business climate. The Action Economics Forecast Survey expected a reading of 62.2. The Chicago Purchasing Managers figures are diffusion indexes where readings above 50 indicate growth.

Haver Analytics constructs an ISM-Adjusted Chicago Business Barometer with similar methodology as the ISM Composite Index. This index slipped to 61.3, but remained at a healthy level. The Chicago index has a 75% correlation with the national ISM Manufacturing Index, which is scheduled for release Thursday, January 3.

A surge in the production component of the Chicago index offset lost ground (from high levels) in delivery times. Last month, the supplier deliveries index had surged, suggesting the slowest delivery times in over a decade. Today's reading erased that positive signal. In addition, the order backlog and inventory readings rose, while new orders declined.

The employment index declined in December to 52.1. While the employment diffusion index can be volatile and often bears no correlation with the employment report, the details of the report were worrisome. The proportion of survey respondents that indicated employment was higher in the month fell by 15 percentage points to 13 percent. That was the lowest figure in two years and the largest month-to-month decline since 2014.

The index of prices paid weakened for the fifth consecutive month. The NSA reading of 63.5 was the lowest since August 2017 and down from July's 81.0. A greatly reduced 33% of respondents reported higher prices, while a slightly increased 6% reported lower prices. The percentage figures are NSA.

The MNI Chicago Report is produced by MNI 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 Action Economics Forecast Survey is available in AS1REPNA.

Chicago Purchasing Managers Index (%, SA) Dec Nov Oct Dec '17 2017 2016 2015
General Business Barometer 65.4 66.4 58.4 67.8 60.8 53.1 50.3
ISM-Adjusted General Business Barometer 61.3 63.1 59.7 65.6 59.0 52.0 51.6
  Production 71.0 65.2 59.8 76.9 64.3 54.7 52.5
  New Orders 67.9 72.5 57.9 72.2 63.5 55.7 50.4
  Order Backlogs 64.6 62.9 51.2 59.6 55.2 47.2 44.4
  Inventories 55.4 53.7 60.2 63.9 54.9 47.2 52.1
  Employment 52.1 55.4 52.5 55.3 52.9 49.4 50.3
  Supplier Deliveries 59.9 68.7 68.3 59.6 59.4 52.8 52.6
  Prices Paid 65.6 73.2 75.1 67.2 64.0 53.2 46.8
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