U.S. Chicago Business Barometer Weakens; Price Gains Slow

The Chicago Purchasing Managers Business Barometer declined to 58.4 in October from September's 60.4. It was the third consecutive monthly decline and left the index below its December peak of 67.8. The Action Economics Forecast Survey expected stability at 60.5. The Chicago Purchasing Managers figures are diffusion indexes where readings above 50 indicate growth.

Haver Analytics constructs an ISM-Adjusted index with similar methodology as the ISM Composite Index. This index improved slightly m/m to 59.7, but also remained below earlier highs. During the last ten years, there has been a 61% correlation between the index level and the quarter-on-quarter change in real GDP.

Lower readings for new & unfilled orders as well as inventories lessened activity overall. These declines were countered by increases in production and supplier deliveries, which moved close to the slowest product delivery speeds since 2011.

The employment index recovered to 52.5 following its sharp September decline and remained above the break-even level of 50. During the last ten years, there has been an 81% correlation between the index level and the month-to-month change in factory sector payrolls. Twenty-one percent (NSA) of survey respondents reported higher payroll levels while 15% (NSA) indicated lower.

The index of prices paid weakened for the third consecutive month to 79.9, the lowest level since May and down from 82.1 reached three months earlier. A greatly lessened 51% of respondents reported higher prices and four percent reported price declines. These figures are NSA.

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.