Global| Jan 31 2020U.S. Chicago Business Barometer Weakens Unexpectedly
by:Tom Moeller
|in:Economy in Brief
Summary
The Chicago Purchasing Managers' Business Barometer declined to 42.9 during January from 48.2 in December. It was the lowest level since December 2015. The Action Economics Forecast Survey expected 48.2. Readings back through 2017 [...]
The Chicago Purchasing Managers' Business Barometer declined to 42.9 during January from 48.2 in December. It was the lowest level since December 2015. The Action Economics Forecast Survey expected 48.2. Readings back through 2017 were revised. This series is a diffusion index where 50 is the level which separates expansion from contraction.
In contrast to the ISM Purchasing Managers' index, which is constructed as an average of five components, the headline Chicago index is constructed from the answer to a single question. Haver Analytics uses the component Chicago subindexes to construct an index using methodology similar to that used to construct the ISM index. This measure declined to 44.9 in January from 48.6 in December. It roughly equaled the lowest level of the economic expansion. During the past 10 years, this index has had a 78% correlation with the national ISM Manufacturing Index, which is scheduled for release on Monday.
The subindexes all declined this month versus December. New orders, order backlogs and production weakened substantially with inventories and supplier deliveries also moving lower.
The employment reading fell to the lowest level since September as 13% of respondents (NSA) reported higher payrolls while 19% reported a decline.
Pricing power weakened this month. The prices paid index reversed most of its December improvement as 24% (NSA) of respondents reported paying higher prices and 11% paid less.
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 usual 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) | Jan | Dec | Nov | Jan '19 | 2019 | 2018 | 2017 |
|---|---|---|---|---|---|---|---|
| General Business Barometer | 42.9 | 48.2 | 46.7 | 58.0 | 51.3 | 62.4 | 60.8 |
| ISM-Adjusted General Business Barometer | 44.9 | 48.6 | 47.4 | 56.7 | 51.4 | 60.8 | 59.0 |
| Production | 42.7 | 46.5 | 44.0 | 60.5 | 51.2 | 64.5 | 64.2 |
| New Orders | 41.5 | 47.6 | 47.6 | 58.2 | 52.0 | 63.8 | 63.4 |
| Order Backlogs | 34.6 | 44.8 | 45.6 | 57.8 | 46.9 | 58.0 | 55.2 |
| Inventories | 40.2 | 46.1 | 44.0 | 52.0 | 48.7 | 55.4 | 54.9 |
| Employment | 47.0 | 47.2 | 49.1 | 53.4 | 49.6 | 55.3 | 52.9 |
| Supplier Deliveries | 53.3 | 55.4 | 52.4 | 59.6 | 55.6 | 64.8 | 59.4 |
| Prices Paid | 56.1 | 58.1 | 53.8 | 66.7 | 58.5 | 73.9 | 64.0 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
More Economy in Brief
