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Economy in Brief

U.S. Chicago Business Barometer Rebounds in February; Employment Declines
by Gerald D. Cohen  February 28, 2020

• Chicago PMI jumps to 49.0 in February, still below 50-growth mark.

• ISM-Adjusted measure calculated by Haver Analytics rises above 50.

• Employment index decreases to 44.5, near nine-year low.

The Chicago Purchasing Managers Business Barometer rebounded to 49.0 in February, more than reversing January's decline to 42.9, which was the lowest level in five years. December's value was 48.2. A reading below the key 50-mark for a diffusion index suggests contracting activity in the Chicago area. The Action Economics Forecast Survey expected 45.8.

Haver Analytics constructs an ISM-Adjusted Chicago Business Barometer with similar methodology as the ISM Composite Index. This measure jumped to 50.8 from 44.9. December's reading was the lowest since the early part of the recovery in 2009. The Chicago ISM-Adjusted index has a 78% correlation with the national ISM Manufacturing Index, which is scheduled for release on Monday.

The key drivers of the rise above 50 for the ISM-adjusted measure were the gains in supplier deliveries and production indices to 61.3 to 51.0 respectively. All of the other production-related measures remained below 50, with the employment index actually decreasing to 44.5, near the nine-year low of 44.0 reached in July 2019. The proportion of survey respondents that indicated lower employment increased to 24% from 19%, though (this data is not-seasonally adjusted). The prices paid measure declined to 52.9.

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) Feb Jan Dec Feb '19 2019 2018 2017
General Business Barometer 49.0 42.9 48.2 61.6 51.3 62.4 60.8
ISM-Adjusted General Business Barometer 50.8 44.9 48.6 58.2 51.4 60.8 59.0
   Production 51.0 42.7 46.5 62.8 51.2 64.5 64.2
   New Orders 49.1 41.5 47.6 64.6 52.0 63.8 63.4
   Order Backlogs 38.2 34.6 44.8 60.5 46.9 58.0 55.2
   Inventories 48.1 40.2 46.1 49.0 48.7 55.4 54.9
   Employment 44.5 47.0 47.2 54.3 49.6 55.3 52.9
   Supplier Deliveries 61.3 53.3 55.4 60.1 55.6 64.8 59.4
   Prices Paid 52.9 56.1 58.1 68.3 58.5 73.9 64.0
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