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Economy in Brief

U.S. Chicago Business Barometer Fell in March
by Sandy Batten  March 31, 2020

• Chicago PMI fell to 47.8 in March, the ninth consecutive month below 50 growth mark.

• ISM-Adjusted measure calculated by Haver Analytics fell even more to 46.9.

• Survey extended only to March 16; so it doesn't capture most of the coronavirus impact.

The Chicago Purchasing Managers Business Barometer fell to 47.8 in March from 49.0 in February. A reading below 50 for this diffusion index suggests contracting activity in the Chicago area. The Action Economics Forecast Survey expected a larger decline to 41.0, likely reflecting the adverse impact of the spreading coronavirus. However, the survey period ended on March 16. So, the March results don't capture the massive slowdown in economic activity that transpired over the second half of March.

Haver Analytics constructs an ISM-Adjusted Chicago Business Barometer with similar methodology to the ISM Composite Index. This measure fell to 46.9 in March from 50.8 in February. The February reading had been the first one above the key 50 mark in the previous eight months. The Chicago ISM-Adjusted index has a 78% correlation with the national ISM Manufacturing Index, which is scheduled for release tomorrow.

Of the five main indicators, production and new orders posted monthly declines and were well below the 50 mark. In contrast, supplier deliveries recorded a significant increase, moving even further above 50. Extended supplier deliveries are typically seen as indicating demand putting pressure on supply. However, in the current environment, they probably point to strained supply chains. The employment index edged up in March but remained well below 50, indicating that employment in the Chicago area was being challenged even before the big layoffs from the coronavirus that the economy experienced in the second half of March.

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) Mar Feb Jan Mar '19 2019 2018 2017
General Business Barometer 47.8 49.0 42.9 57.2 51.3 62.4 60.8
ISM-Adjusted General Business Barometer 46.9 50.8 44.9 56.3 51.4 60.8 59.0
   Production 44.4 51.0 42.7 60.3 51.2 64.5 64.2
   New Orders 45.2 49.1 41.5 58.0 52.0 63.8 63.4
   Order Backlogs 40.3 38.2 34.6 44.9 46.9 58.0 55.2
   Inventories 34.6 48.1 40.2 48.4 48.7 55.4 54.9
   Employment 44.9 44.5 47.0 54.1 49.6 55.3 52.9
   Supplier Deliveries 65.3 61.3 53.3 60.7 55.6 64.8 59.4
   Prices Paid 56.7 52.9 56.1 63.7 58.5 73.9 64.0
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