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Economy in Brief

U.S. Chicago Business Barometer Weakens Further During May
by Tom Moeller  May 29, 2020

• Chicago PMI fell to lowest level since March 1982.

• ISM-Adjusted measure similarly weakened due to COVID-19.

• Lower production & new orders continued to lead decline.

The Chicago Purchasing Managers Business Barometer fell to 32.3 in May from 35.4 in April, continuing to reflect the depressing effects of the coronavirus on business around the world. A reading below 50 for this diffusion index suggests contracting activity in the Chicago area. The Action Economics Forecast Survey expected a reading of 36.7.

Haver Analytics constructs an ISM-Adjusted Chicago Business Barometer with similar methodology to the ISM Composite Index. This measure fell to 41.8 in May, the lowest reading since July 2009. During the last ten years, the Chicago ISM-Adjusted index has an 80% correlation with the national ISM Manufacturing Index, which is scheduled for release on Monday.

Of the five main indicators, production, new orders and order backlogs posted large declines. A fairly steady seventeen percent (NSA) of respondents reported higher orders and a greatly increased 73% reported declines. These declines were accompanied by a meaningful drop in the supplier delivery index suggesting quicker product deliver speeds. The inventory measure rose to the highest level since June of last year.

The employment index also improved slightly, but at 37.0 it remained down from a recent peak of 59.1 in January 2018. Just six percent of survey respondents reported a rise in hiring while 32% reported a decline.

The index of prices paid rose to 53.8 from 48.4, indicating some improvement in pricing power after a decline in April. A greater 26% of respondents reported higher prices, a measure that has moved sideways for a year.

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) May Apr Mar May '19 2019 2018 2017
General Business Barometer 32.3 35.4 47.8 52.8 51.3 62.4 60.8
ISM-Adjusted General Business Barometer 41.8 42.1 46.9 53.4 51.4 60.8 59.0
   Production 23.7 25.3 44.4 54.9 51.2 64.5 64.2
   New Orders 21.9 24.2 45.2 56.0 52.0 63.8 63.4
   Order Backlogs 26.9 37.3 40.3 42.6 46.9 58.0 55.2
   Inventories 52.3 48.2 34.6 51.0 48.7 55.4 54.9
   Employment 37.0 33.8 44.9 49.6 49.6 55.3 52.9
   Supplier Deliveries 74.3 78.9 65.3 55.5 55.6 64.8 59.4
   Prices Paid 53.8 48.4 56.7 56.6 58.5 73.9 64.0
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