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Economy in Brief

U.S. Chicago Purchasing Managers Index Modestly Positive
by Carol Stone, CBE  August 30, 2019

The Chicago Business Barometer rebounded to 50.4 in August from 44.4 during July, putting the index back above the 50% breakeven between growth and decline. This was stronger than the consensus in the Action Economics Forecast Survey, which looked for 47.5; that would have been an improvement from July but still shown some slowing of activity. 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 edged up to 48.7 from the prior 47.5 reading, still showing some reduction in overall activity. This Chicago index has a 68% correlation with the national ISM Manufacturing Index, which is scheduled for release Tuesday, September 3. During the last 15 years the index has had a 60% correlation with q/q change in real GDP.

The component indexes tended toward improvement, although there were some notable down movements. On the upside, new orders shifted to 53.4 for August, up nicely from July’s 43.6. That contributed to a gain in order backlogs, which reached 51.3 from July’s 43.5. Production still had a weakening tendency at 48.1, but this was much better than the 41.4 of July. On the other side, inventories fell back from July’s 54.0 to 47.9, and the supplier deliveries index decreased to 50.3 from 55.6. The latter move indicates that deliveries were still taking longer, but much less so than in July.

The employment index, at 43.7 in August, still showed some weakening, but a bit less than in July, when the index was 42.9. The proportion of survey respondents reporting higher employment fell to 10% from 16%; the share with reduced employment also fell, reaching 20%, compared to 27% the month before. Thus, the overall index was still negative, but less so. These share figures are not seasonally adjusted.

The prices paid index turned upward for August, reaching 59.8 from July’s 56.1; that compares to a recent low of 50.8 in April. The share of respondents paying higher prices decreased to 23% from July’s 29%, while those paying lower prices also decreased, down to 8% from July’s 16%.

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) Aug Jul Jun Aug '18 2018 2017 2016
General Business Barometer 50.4 44.4 49.7 63.9 62.4 60.7 53.0
ISM-Adjusted General Business Barometer 48.7 47.5 52.0 60.7 60.7 59.0 51.9
   Production 48.1 41.4 53.1 67.6 64.5 64.2 54.5
   New Orders 53.4 43.6 49.6 65.7 63.8 63.6 55.6
   Order Backlogs 51.3 43.5 40.7 60.1 58.0 55.2 47.1
   Inventories 47.9 54.0 54.9 53.1 55.3 54.9 47.2
   Employment 43.7 42.9 52.0 55.2 55.2 52.9 49.4
   Supplier Deliveries 50.3 55.6 50.3 62.0 64.8 59.4 52.8
   Prices Paid 59.8 56.1 56.4 80.5 74.0 64.1 53.2
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