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Economy in Brief

Chicago Purchasing Managers Index Posts Two-Year High; Prices Jump
by Tom Moeller  February 28, 2017

The Chicago Purchasing Managers Business Barometer Index recovered to 57.4 in February after a decline to 50.3 in January. The latest figure was the highest since January 2015. The February reading exceeded expectations for 53.0 in the Action Economics Forecast Survey. Readings above 50 indicate growth, while those below 50 show declines in activity levels.

Haver Analytics constructs an ISM-Adjusted Index using the Chicago numbers, comparable to the overall ISM index to be released tomorrow. The Haver figure jumped to 57.6, the highest level since December 2014. During the last ten years, there has been a 61% correlation between this adjusted Chicago Purchasing Managers index and real GDP growth.

The employment reading jumped to 57.1, the highest level since October 2014. A strengthened 26% (NSA) of respondents reported higher payroll levels while a reduced 15% reported them lower. During the last ten years, there has been a 74% correlation between the employment index and the m/m change in nonfarm payrolls.

The new orders and production series also improved sharply as did inventories. The order backlog series rose too, but the supplier delivery series fell, indicating faster product delivery speeds.

The prices paid barometer jumped to 68.6, the highest level since September 2014. Forty-two percent of respondents paid higher prices compared to 8% in February 2016. Six percent paid lower prices compared to 24 percent one year earlier.

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%. The ISM-Adjusted headline index is calculated by Haver Analytics using these data to construct a figure with the ISM methodology. 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) Feb Jan Dec Feb '16 2016 2015 2014
General Business Barometer 57.4 50.3 53.9 49.3 53.1 50.3 60.7
ISM-Adjusted General Business Barometer 57.6 50.0 53.0 47.8 52.0 51.6 59.3
  Production 60.3 56.0 58.3 46.5 54.7 52.5 64.5
  New Orders 59.2 49.1 56.9 51.3 55.7 50.4 63.8
  Order Backlogs 49.0 45.6 43.2 47.6 47.4 44.4 54.2
  Inventories 58.4 43.1 45.8 44.9 47.3 52.1 55.9
  Employment 57.1 46.5 49.8 46.0 49.4 50.3 56.0
  Supplier Deliveries 52.8 55.1 54.1 50.2 52.8 52.5 56.5
  Prices Paid 68.6 61.4 58.1 42.0 53.2 46.8 61.0
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