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Economy in Brief

Chicago Purchasing Managers Index Improves to Five-Month High; Prices Strengthen
by Tom Moeller  June 29, 2018

The Chicago Purchasing Managers Business Barometer increased to 64.1 during June from May's unrevised 62.7. It was the highest level since January, continuing its sharply rising trend during the last three years. The Action Economics Forecast Survey expected a decline to 60.8. The Chicago Purchasing Managers figures are diffusion indexes and readings above 50 indicate growth.

Haver Analytics constructs an ISM-Adjusted index with similar methodology as the ISM Composite Index. This index increased to 61.1 from 60.9 during May. It also was the highest level since January. During the last ten years, there has been a 67% correlation between the index level and the q/q change in real GDP.

The rise in the overall business barometer reflected broad-based improvement amongst the component series. The order backlog series strengthened to the highest level since October. The new orders series also gained and the rise in the vendor delivery series indicated the slowest rate of order fulfillment since November. Working the other way, the inventories series fell to the lowest point since last August, while the production index eased slightly.

The employment component rose modestly, though it remained down versus its January high. During the last ten years, there has been a 75% correlation between the index level and the m/m change in factory sector payrolls. Twenty-eight percent of survey respondents reported higher payroll levels and 14% indicated a decline.

The index of prices paid rose to 76.3, its highest level since May 2011. Sixty-three percent of respondents reported higher prices, a seven-year high, while four percent reported price declines.

The MNI Chicago Report is produced by MNI/Deutsche Borse Group 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 Consensus expectations figure is available in AS1REPNA.

Chicago Purchasing Managers Index (%, SA) Jun May Apr Jun '17 2017 2016 2015
General Business Barometer 64.1 62.7 57.6 63.6 60.8 53.1 50.3
ISM-Adjusted General Business Barometer 61.1 60.9 57.8 60.8 59.0 52.0 51.6
  Production 64.6 65.0 59.0 66.2 64.3 54.7 52.5
  New Orders 65.4 63.5 58.0 67.9 63.5 55.7 50.4
  Order Backlogs 64.4 60.7 49.7 57.8 55.2 47.2 44.4
  Inventories 52.8 54.9 53.8 53.0 54.9 47.2 52.1
  Employment 55.2 54.7 52.1 55.6 52.9 49.4 50.3
  Supplier Deliveries 67.5 66.4 66.0 61.2 59.4 52.8 52.6
  Prices Paid 76.3 71.5 75.9 58.6 64.0 53.2 46.8
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