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Economy in Brief

U.S. Chicago Business Barometer Weakens Unexpectedly
by Tom Moeller  January 31, 2020

The Chicago Purchasing Managers' Business Barometer declined to 42.9 during January from 48.2 in December. It was the lowest level since December 2015. The Action Economics Forecast Survey expected 48.2. Readings back through 2017 were revised. This series is a diffusion index where 50 is the level which separates expansion from contraction.

In contrast to the ISM Purchasing Managers' index, which is constructed as an average of five components, the headline Chicago index is constructed from the answer to a single question. Haver Analytics uses the component Chicago subindexes to construct an index using methodology similar to that used to construct the ISM index. This measure declined to 44.9 in January from 48.6 in December. It roughly equaled the lowest level of the economic expansion. During the past 10 years, this index has had a 78% correlation with the national ISM Manufacturing Index, which is scheduled for release on Monday.

The subindexes all declined this month versus December. New orders, order backlogs and production weakened substantially with inventories and supplier deliveries also moving lower.

The employment reading fell to the lowest level since September as 13% of respondents (NSA) reported higher payrolls while 19% reported a decline.

Pricing power weakened this month. The prices paid index reversed most of its December improvement as 24% (NSA) of respondents reported paying higher prices and 11% paid less.

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 usual 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 '19 2019 2018 2017
General Business Barometer 42.9 48.2 46.7 58.0 51.3 62.4 60.8
ISM-Adjusted General Business Barometer 44.9 48.6 47.4 56.7 51.4 60.8 59.0
   Production 42.7 46.5 44.0 60.5 51.2 64.5 64.2
   New Orders 41.5 47.6 47.6 58.2 52.0 63.8 63.4
   Order Backlogs 34.6 44.8 45.6 57.8 46.9 58.0 55.2
   Inventories 40.2 46.1 44.0 52.0 48.7 55.4 54.9
   Employment 47.0 47.2 49.1 53.4 49.6 55.3 52.9
   Supplier Deliveries 53.3 55.4 52.4 59.6 55.6 64.8 59.4
   Prices Paid 56.1 58.1 53.8 66.7 58.5 73.9 64.0
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