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Economy in Brief

U.S. Chicago Purchasing Managers Index Continues to Decline
by Tom Moeller  July 31, 2019

The Chicago Business Barometer fell to 44.4 during July from an unrevised 49.7 in June. It was the lowest reading since December 2015. The Action Economics Forecast Survey expected a reading of 51.3. 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 47.5, the lowest also since December 2015. The Chicago index has a 68% correlation with the national ISM Manufacturing Index, scheduled for release tomorrow. During the last 15 years the index, has had a 60% correlation with q/q change in real GDP.

Most of the component indexes declined last this month, led by an 11.7 point drop in production to 41.4, the lowest point in 10 years. New orders declined six points to 43.6, near the late-2015 low. Inventories fell slightly. To the upside, order backlogs and vendor deliveries rose, the latter indicating slightly slower product delivery speeds.

The employment index fell 9.1 points to 42.9 and reflected a decline in payrolls for the first time since December 2009. The proportion of survey respondents indicating higher employment fell to 16% from 23% while the share of respondents cutting payrolls eased to 57%. These figures are not seasonally adjusted.

The prices paid index fell slightly in July to 56.1 and remained sharply below the July 2018 peak of 81.1. A lessened 28% (NSA) of respondents were raising prices while a higher 16% lowered them.

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) Jul Jun May Jul '18 2018 2017 2016
General Business Barometer 44.4 49.7 54.2 64.1 62.4 60.7 53.0
ISM-Adjusted General Business Barometer 47.5 52.0 54.5 60.5 60.7 59.0 51.9
   Production 41.4 53.1 57.3 67.6 64.5 64.2 54.5
   New Orders 43.6 49.6 58.6 64.6 63.8 63.6 55.6
   Order Backlogs 43.5 40.7 41.1 62.1 58.0 55.2 47.1
   Inventories 54.0 54.9 51.4 46.9 55.3 54.9 47.2
   Employment 42.9 52.0 50.0 57.2 55.2 52.9 49.4
   Supplier Deliveries 55.6 50.3 55.4 66.3 64.8 59.4 52.8
   Prices Paid 56.1 56.4 53.8 81.1 74.0 64.1 53.2
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