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Economy in Brief

Chicago Purchasing Managers Index Weakens Again
by Tom Moeller  February 28, 2018

The Chicago Purchasing Managers Business Barometer for February declined to 61.9 following a fall to 65.7 in January. It was the lowest index level since August 2017 and well below December's peak of 67.8. A decline to 64.0 had been expected in the Action Economics Forecast Survey. Purchasing Managers figures are diffusion indexes where readings above 50 indicate growth. Figures for the last two years were revised.

Based on these figures, Haver Analytics constructs an index that is comparable to the ISM Composite index. The figure fell to 60.7 from 65.9. It also was the lowest index level in six months. During the last ten years, there has been a 63% correlation between the index and the q/q change in real GDP.

The decline in the total index reflected broad-based component weakness, with new orders, production and inventories each declining to six-month lows. The order backlog series weakened to a greater degree as it fell to the lowest point in nine months. The supplier delivery index fell m/m, but showed only slightly quicker product delivery speeds. The index indicated, however, much slower product delivery speeds versus early-2016.

The jobs index roughly reversed its January rise, but remained up sharply from the June 2016 low. During the last ten years, there has been a 79% correlation between the employment index and the m/m change in factory sector payrolls.

The prices paid measure declined to 65.0, the lowest level in six months. Thirty-eight percent (NSA) of respondents reported paying higher prices while four percent paid less.

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 '17 2017 2016 2015
General Business Barometer 61.9 65.7 67.8 57.3 60.8 53.1 50.3
ISM-Adjusted General Business Barometer 60.7 65.9 65.6 57.5 59.0 52.0 51.6
  Production 67.9 73.4 76.9 60.1 64.3 54.7 52.5
  New Orders 62.9 66.4 72.2 59.7 63.5 55.7 50.4
  Order Backlogs 52.0 55.1 59.6 48.7 55.2 47.2 44.4
  Inventories 54.9 63.5 63.9 56.8 54.9 47.2 52.1
  Employment 56.1 60.7 55.3 56.5 52.9 49.4 50.3
  Supplier Deliveries 61.5 65.3 59.6 54.3 59.4 52.8 52.5
  Prices Paid 65.0 72.1 67.2 66.2 64.0 53.2 46.8
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