U.S. Chicago Business Barometer Jumps Almost 12 Points in November
Summary
- November reading well above 50, highest in a year-and-a-half.
- Production and new orders up most, show business activity strengthened.
- Inflation still strong, but did ease in latest survey.
The MNI Chicago Business Barometer surged 11.8 points in November to 55.8 from 44.0 in October and is the highest since 58.5 in May 2022. The Action Economics Forecast Survey had looked for the index to remain in sub-50 territory this month at 46.0; the index has been below 50 since July 2022, indicating a number of months of decreasing activity.
Haver Analytics calculates an ISM-adjusted version of this index, and that stands at 56.6 in this month’s reading. This is the highest since 57.3 in June 2022. It touched just above 50 at 50.1 in August and prior to that had been below 50 since August of last year. So manufacturing in the Chicago area had been quite sluggish for about a whole year.
In the MNI reading, all the activity components improved in November. The two strongest were production and new orders, as indicated by the size of the increases in those items. Production advanced 15.9 points this month to 62.4, the highest reading of any of the components, as well as the largest month-on-month increase. New orders expanded 12.5 points to 54.7; this was actually higher back in August, at 55.6.
There was also a sizable increase in the inventory measure, up 9.9 to 54.7 from 44.8 in October. This measure had been down at 34.2 as recently as July, although there is considerably monthly volatility in it. Supplier deliveries increased almost the same amount, by 9.7 points to 57.1. These had been below 50 for the last six months and the November reading is the highest since 58.5 in February.
The only activity component to show a contraction was order backlogs, at 46.5 in November; however, they did improve in the month, rising from just 39.1 in October. These have been below 50 since last December.
As noted last month, employment did increase marginally then, to 50.2. In November it is stronger, at 53.9, the highest since 54.0 in July 2022.
Notably, the only decrease in a survey component in November is in prices paid. These were still rising fairly strongly at 59.9, but that is a bit less than October’s reading of 60.1. The behavior of this component of the Chicago survey highlights the inflation situation in that the last three months, at 59.5 in September, 60.1 in October and 59.9 in the current reading are the least strong since mid-2020. The highest reading was 94.6 in November 2021.
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.
Carol Stone, CBE
AuthorMore in Author Profile »Carol Stone, CBE came to Haver Analytics in 2003 following more than 35 years as a financial market economist at major Wall Street financial institutions, most especially Merrill Lynch and Nomura Securities. She has broad experience in analysis and forecasting of flow-of-funds accounts, the federal budget and Federal Reserve operations. At Nomura Securites, among other duties, she developed various indicator forecasting tools and edited a daily global publication produced in London and New York for readers in Tokyo. At Haver Analytics, Carol is a member of the Research Department, aiding database managers with research and documentation efforts, as well as posting commentary on select economic reports. In addition, she conducts Ways-of-the-World, a blog on economic issues for an Episcopal-Church-affiliated website, The Geranium Farm. During her career, Carol served as an officer of the Money Marketeers and the Downtown Economists Club. She has a PhD from NYU's Stern School of Business. She lives in Brooklyn, New York, and has a weekend home on Long Island.
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