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Economy in Brief

U.S. Chicago Business Barometer Dropped Sharply in September
by Kathleen Stephansen, CBE  September 30, 2022

• Production and new orders plummeted during September.

• Employment weakened and supplier delivery speeds eased.

• Price index softened.

The ISM-Chicago Purchasing Managers Business Barometer dropped to 45.7 in September after having edged up to 52.2 in August. An index level of 51.7 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 dropped to 47.9 in September following the 56.4 reading in August.

The production index plummeted to 44.5 in September from 54.9 in August. Only 19% of (NSA) of respondents reported higher production, while 31% reported a decline.

The new orders index dropped to 42.2 this past month after rising moderately to 48.9 in August. Twelve percent of respondents (NSA) reported increased orders and a lessened 27% reported a decrease. The order backlog index dropped to 41.9 after a reading of 54.5 the prior month. The inventories index eased to 53.0 in September down from the 61.6 surge in August.

The employment index fell to 40.2 from 54.6 in August and reached below the February low of 43.5. Only 9% of respondents (NSA) reported higher employment while a higher 29% reported less hiring. Also moving down this month was the supplier deliveries index to 59.8 from 62.1 in August, reaching the lowest reading since July 2020. Thirty-one percent of respondents (NSA) reported slower product delivery speeds while 9% reported faster delivery speeds.

Inflation pressures are easing moderately. The prices paid index eased to 74.1 in September from 81.8 in August. This was the lowest reading since November 2020, though it remains sharply higher than the April 2020 low of 48.7. A lessened 56% (NSA) of respondents reported higher prices paid while 9% 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.

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