U.S. Chicago Business Barometer Improves Again in August
Summary
- Index remains below the 50-expansion level.
- New orders & production indexes rise above the expansion level.
- Prices paid index rebounds.
The ISM-Chicago Purchasing Managers Business Barometer rose to a higher-than-expected seasonally adjusted 48.7 during August, from 42.8 during July.
Nevertheless, it has remained below 50 (the break-even point for rising vs. falling activity) for twelve consecutive months. The index peaked at 71.3 in May 2021. A reading of 44.0 had been expected in the Action Economics Forecast Survey.
Haver Analytics constructs an ISM-Adjusted Chicago Business Barometer with methodology similar to the ISM Composite Index. This measure rebounded to 50.1 in August from 41.4 in July. The latest reading remains below a 64.4 high in October 2021.
The production measure bounced back to 57.1 in August from 45.1 in July. An improved 35% (NSA) of survey respondents reported higher production while a lessened 19% reported a decline. The new orders measure rose to 55.6 in August from 43.0 last month. Also an improved 35% of survey respondents reported more new orders while a fewer 27% reported declines. The order backlog index fell to 28.9 from 35.8 in July. Just 12% of survey respondents reported higher backlogs while 50% reported a decline.
The employment index rebounded to 48.3 in August from 39.7 in July. Seventeen percent of respondents reported more hiring while 21% reported less. The inventories index rose to 44.0 from 34.2 in July. The high of 66.6 was reached in May of last year. Twenty-five percent of respondents reported higher inventory levels while 38% reported a decline. The supplier-delivery series improved slightly to 45.3 from 44.8 in July. An 11% of respondents reported slower delivery speeds while a higher 21% reported an increase.
Inflation pressures picked up again in August. The prices paid index rose to 74.0 from 62.1 in July and after having fallen to 53.5 in June. The index remained below the high of 94.6 in November 2021. Fifty-four percent (NSA) of respondents reported an increase in prices, while 7% reported lower prices.
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.
Kathleen Stephansen, CBE
AuthorMore in Author Profile »Kathleen Stephansen is a Senior Economist for Haver Analytics and an Independent Trustee for the EQAT/VIP/1290 Trust Funds, encompassing the US mutual funds sponsored by the Equitable Life Insurance Company. She is a former Chief Economist of Huawei Technologies USA, Senior Economic Advisor to the Boston Consulting Group, Chief Economist of the American International Group (AIG) and AIG Asset Management’s Senior Strategist and Global Head of Sovereign Research. Prior to joining AIG in 2010, Kathleen held various positions as Chief Economist or Head of Global Research at Aladdin Capital Holdings, Credit Suisse and Donaldson, Lufkin and Jenrette Securities Corporation.
Kathleen serves on the boards of the Global Interdependence Center (GIC), as Vice-Chair of the GIC College of Central Bankers, is the Treasurer for Economists for Peace and Security (EPS) and is a former board member of the National Association of Business Economics (NABE). She is a member of Chatham House and the Economic Club of New York. She holds an undergraduate degree in economics from the Universite Catholique de Louvain and graduate degrees in economics from the University of New Hampshire (MA) and the London School of Economics (PhD abd).
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