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Economy in Brief

U.S. Chicago Business Barometer Slumped in April
by Sandy Batten  April 30, 2019

The Chicago Purchasing Managers Business Barometer fell in April for the second consecutive month--to 52.6 from 58.7 in March and 64.7 in February. This is the lowest reading since January 2017. The Action Economics Forecast Survey had looked for a slight increase to 59.0. The Chicago Purchasing Managers figures are diffusion indexes where readings above 50 indicate growth.

Note that in contrast to the Purchasing Managers' index, which is constructed from five components, the headline Chicago index is constructed from the answer to a single question. So, Haver Analytics uses the component subindexes to construct an index using methodology similar to that used to construct the ISM index. This measure also fell to 52.6 in April from 57.7 in March, also its lowest reading since January 2017. Over the past 15 years, this ISM-adjusted Chicago index has an 83% correlation with the national ISM Manufacturing Index, which is scheduled for release tomorrow.

In April, three of the indexes five major components fell. Production plunged to 50.5 from 64.2. The NSA percentage of respondents reporting an increase in production dropped to 28% in April from 42% in March, the lowest reading since January 2017. New orders fell to 54.6 from 59.8, and supplier deliveries slipped to 57.4 from 60.9. In contrast, the order backlogs index climbed back above 50 to 51.2 in April from 44.7 in March, while inventories rose in April--to 49.9 from 47.4--but remained below the critical 50 level.

The employment index slumped to 50.4 in April from 56.2. This is its lowest reading since October 2017 and only marginally above 50. And despite the general rise in energy prices during the month, the prices paid index fell sharply to 50.8 in April from 64.5. This is its lowest reading since March 2016

With the drop in the headline index in April, the index starts the second quarter well below the first quarter average, pointing to a meaningful slowdown in manufacturing activity across the Chicago area in Q2.

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) Apr Mar Feb Apr '18 2018 2017 2016
General Business Barometer 52.6 58.7 64.7 58.8 62.4 60.7 53.0
ISM-Adjusted General Business Barometer 52.6 57.7 59.8 58.5 60.7 59.0 51.9
  Production 50.5 64.2 67.3 60.2 64.5 64.2 54.5
  New Orders 54.6 59.8 68.4 59.4 63.8 63.6 55.6
  Order Backlogs 51.2 44.7 63.6 55.1 58.0 55.2 47.1
  Inventories 49.9 47.4 47.8 54.2 55.3 54.9 47.2
  Employment 50.4 56.2 55.5 52.6 55.2 52.9 49.4
  Supplier Deliveries 57.4 60.9 60.2 66.2 64.8 59.4 52.8
  Prices Paid 50.8 64.5 71.2 74.3 74.0 64.1 53.2
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