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Economy in Brief

U.S. Chicago Business Barometer Surges in July
by Tom Moeller  July 31, 2020

• The gain surpasses expectations.

• Component improvement is broad-based.

The Chicago Purchasing Managers Business Barometer improved to 51.9 during July from 36.6 in June. It was the highest reading since May 2019, up from a low of 32.3 in May. A reading above 50 suggests rising activity in the Chicago area. The Action Economics Forecast Survey expected a reading of 44.0.

Haver Analytics constructs an ISM-Adjusted Chicago Business Barometer with similar methodology to the ISM Composite Index. This measure strengthened to 50.1 in July, the highest level since February. During the last dozen years, there has been a 51% correlation between the Chicago ISM-Adjusted index and q/q growth in real GDP.

The production, new orders and order backlogs series increased sharply. An improved 38% (NSA) of respondents reported higher orders and a greatly reduced 33% reported declines. These figures were accompanied by a rise in the inventories reading. The supplier delivery index eased indicating quicker product delivery speeds, and it remained well below its April high.

The employment index rose 40.1 its highest level in four months. It remained down from a recent peak of 59.1 in January 2018. Nine percent of survey respondents reported a rise in hiring while 27% reported a decline.

The index of prices paid rose to 56.9 from 55.2, indicating a rise in pricing power. A slightly lessened 23% of respondents reported higher prices but a greatly lessened 9% reported a decline.

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) Jul Jun May Jul '19 2019 2018 2017
General Business Barometer 51.9 36.6 32.3 46.5 51.3 62.4 60.8
ISM-Adjusted General Business Barometer 50.1 40.2 41.8 47.9 51.4 60.8 59.0
   Production 50.6 33.8 23.7 42.5 51.2 64.5 64.2
   New Orders 53.1 29.3 21.9 46.3 52.0 63.8 63.4
   Order Backlogs 47.2 31.9 26.9 44.0 46.9 58.0 55.2
   Inventories 46.3 39.4 52.3 51.9 48.7 55.4 54.9
   Employment 40.1 31.9 37.0 44.0 49.6 55.3 52.9
   Supplier Deliveries 60.3 66.7 74.3 54.8 55.6 64.8 59.4
   Prices Paid 56.9 55.2 53.8 56.0 58.5 73.9 64.0
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