Haver Analytics
Haver Analytics
| Feb 28 2023

U.S. Chicago Business Barometer Worsens in February; Below 50 for the Sixth Consecutive Month

  • Index declines 0.7 pts. to 43.6 in Feb., the lowest since Nov., w/ production down 10.2 pts. to 38.4 and employment down 4.7 pts. to 37.3.
  • New orders contract for nine straight months while production (at a three-month low) and employment (the lowest since June ’20) contract for six successive months.
  • Order backlogs up 4.5 pts. to 40.0 and new orders up 3.0 pts. to 43.6, still in contraction territory, but supplier deliveries up 3.6 pts. to an expansion-level 58.5.
  • Prices paid index, while down 7.2 pts. in Feb., remains at a very high 65.3.

The ISM-Chicago Purchasing Managers Business Barometer fell to a three-month-low 43.6 in February, the fifth monthly fall in six months, after declining to 44.3 in January. The February level remained below the 50 expansion-contraction dividing line for the sixth straight month; it was also below 58.7 last February and significantly down from peaks of 71.3 in May 2021 and 71.0 in July 2021. The Action Economics Forecast Survey had expected 45.0 for February. Haver Analytics constructs an ISM-Adjusted Chicago Business Barometer with methodology similar to the ISM Composite Index. This measure fell back to 44.5 in February from 46.2 in January, registering the lowest level since June 2020 and remaining below 50 for the sixth consecutive month. The latest reading was down from 58.1 last February and a 64.4 high in October 2021.

The production index dropped to a three-month-low 38.4 in February from 48.6 in January, indicating production contracted for the sixth successive month at a more severe pace; the index was well below 56.3 last February and a 70.4 high in April 2021. The supplier deliveries index was at 58.5 this month, the highest level since October, up from 54.9 in January but meaningfully down from 76.1 last February. Sixteen percent of respondents (NSA) reported slower product delivery speeds while only 3% reported faster delivery speeds. The new orders index rebounded to 43.6 this month from 40.6 in January, posting its ninth straight monthly contraction but at a slightly less severe pace; the index was down from 55.3 last February and a 77.0 peak in May 2021. Twenty-three percent of respondents (NSA) reported higher orders while 37% reported a decrease. The orders backlog index increased 4.5 points to 40.0 this month after dropping 19.2 points to 35.5 in January (the lowest since June 2020); however, it remained well below 61.1 last February and a 75.0 high in October 2021. The inventories index was unchanged at 44.9 in February, showing the third consecutive monthly contraction; it was down from a 66.6 peak in May and an expansion-level 58.2 in February of last year.

On the labor front, the employment index fell to 37.3 in February from 42.0 in January, indicating employment contracted for the sixth straight month to the lowest level since June 2020. The index was below a contraction-level 44.7 last February and a 56.7 high in October 2021. Only 6% of respondents (NSA) reported higher employment while an increased 34% reported less hiring.

Inflation pressures lessened somewhat this month but remained very high. The prices paid index declined to 65.3 in February after rising to 72.5 in January. It was well below 87.4 last February and a 94.6 peak in November 2021. Thirty-nine percent of respondents (NSA) reported higher prices paid while 10% 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.

  • Winnie Tapasanun has been working for Haver Analytics since 2013. She has almost 20 years of working in the financial services industry. As Vice President and Economic Analyst at Globicus International, Inc., a New York-based company specializing in macroeconomics and financial markets, Winnie oversaw the company’s business operations, managed financial and economic data, and wrote daily reports on macroeconomics and financial markets. Prior to working at Globicus, she was Investment Promotion Officer at the New York Office of the Thailand Board of Investment (BOI) where she wrote monthly reports on the U.S. economic outlook, wrote reports on the outlook of key U.S. industries, and assisted investors on doing business and investment in Thailand. Prior to joining the BOI, she was Adjunct Professor teaching International Political Economy/International Relations at the City College of New York. Prior to her teaching experience at the CCNY, Winnie successfully completed internships at the United Nations.   Winnie holds an MA Degree from Long Island University, New York. She also did graduate studies at Columbia University in the City of New York and doctoral requirements at the Graduate Center of the City University of New York. Her areas of specialization are international political economy, macroeconomics, financial markets, political economy, international relations, and business development/business strategy. Her regional specialization includes, but not limited to, Southeast Asia and East Asia.   A bilingual (English and Thai) with competency in French, Winnie loves to travel (25 countries so far) to better understand each country’s unique economy, fascinating culture and people as well as the global economy as a whole.

    More in Author Profile »

More Economy in Brief