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Economy in Brief

U.S. Chicago Business Barometer Eases in October
by Tom Moeller  October 31, 2022

• Employment, order backlogs & production rise.

• New orders & supplier deliveries ease.

• Prices paid index edges higher.

The ISM-Chicago Purchasing Managers Business Barometer slipped to 45.2 in October after falling sharply to 45.7 in September. An index level of 47.2 had been expected in the Action Economics Forecast Survey. The index was below the May 2021 high of 73.3. Haver Analytics constructs an ISM-Adjusted Chicago Business Barometer with methodology similar to the ISM Composite Index. It rose to 49.2 this month and reversed a small piece of the sharp September decline to 47.9.

The employment index jumped to 45.6 and recovered a third of its September decline. It nevertheless remained below the recent high of 56.1 in July. The increase came as an improved 11% of (NSA) of respondents reported higher employment while a lessened 19% reported a decline.

The unfilled orders measure rose to 47.3 and also recaptured about a third of the September fall. The production index rose to 45.1 but remained near its two-year low. A greatly improved 27% (NSA) of respondents reported higher production while a slightly higher 36% reported a decline. The inventories index rose to 56.9, still down from a high of 69.1 this past May.

Working lower, the new orders index dropped to 39.2 in October after falling sharply to 42.2 in September. The reading was down from a high of 79.0 in May of last year. Fifteen percent of respondents reported higher new orders while 35% reported a decline. The supplier delivery index eased to 59.3, the lowest level since January 2020.

Inflation pressures stabilized in October. The prices paid index edged up to 74.8 from 74.1 in September. The reading stood far below its high of 94.1 twelve months ago, but remained near the lowest reading since December 2020. A lessened 54% (NSA) of respondents reported higher prices paid while a steady 9% reported price declines.

The Chicago Business Barometer is considered to be a leading indicator of the U.S. economy. An indicator reading above 50 indicates expansion while below 50 suggests contraction. Summary data are contained in Haver's USECON database with detail including the ISM-style index in the SURVEYS database. The expectations figure from the Action Economics Forecast Survey is in the AS1REPNA database.

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