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Economy in Brief

U.S. Chicago Business Barometer Falls to 2-Year Low
by Gerald D. Cohen  January 31, 2019

The Chicago Purchasing Managers Business Barometer dropped to a two-year low of 56.7 in January from a downwardly-revised 63.8 in December. The Action Economics Forecast Survey expected 62.0. 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 fell to 55.7, suggesting continued healthy growth, but at a slower pace than last year. The Chicago index has an 80% correlation with the national ISM Manufacturing Index, which is scheduled for release tomorrow.

All of the output related indexes declined, led by a 12.9 point drop in new orders to a two-year low of 53.2. Production fell 7.8 points to 58.8 while backlogs declined 5.7 points. After weakening for five consecutive months, the index of prices paid was unchanged at 67.0 in January. The prices paid measure hit a cycle high of 81.1 in July 2018.

The employment index edged up to 53.2. The proportion of survey respondents that indicated higher employment rebounded to 25% from 13%, though this was mostly offset by a 6 percentage point increase in respondents cutting payrolls (the respondent share data are not-seasonally adjusted).

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) Jan Dec Nov Jan '18 2018 2017 2016
General Business Barometer 56.7 63.8 63.5 63.9 62.4 60.7 53.0
ISM-Adjusted General Business Barometer 55.7 60.5 61.5 63.6 60.7 59.0 51.9
  Production 58.8 66.6 63.5 69.1 64.5 64.2 54.5
  New Orders 53.2 66.1 69.4 63.9 63.8 63.6 55.6
  Order Backlogs 58.0 63.7 59.4 55.3 58.0 55.2 47.1
  Inventories 52.6 54.9 53.2 61.0 55.3 54.9 47.2
  Employment 53.2 53.1 55.0 58.9 55.2 52.9 49.4
  Supplier Deliveries 60.5 61.6 66.4 65.3 64.8 59.4 52.8
  Prices Paid 67.0 67.0 73.3 71.2 74.0 64.1 53.2
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