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Economy in Brief

Chicago Purchasing Managers Index Declines Sharply
by Tom Moeller  March 29, 2018

The Chicago Purchasing Managers Business Barometer for March fell to 57.4 following a decline to 61.9 in February. It was the lowest index level in twelve months and compared to December's peak of 67.8. Stability at 62.0 had been expected in the Action Economics Forecast Survey. Purchasing Managers figures are diffusion indexes where readings above 50 indicate growth.

Based on these figures, Haver Analytics constructs an index that is comparable to the ISM Composite index. The figure fell to 59.3 from 60.7. It was the lowest index level since August of last year. During the last ten years, there has been a 66% correlation between the index and the q/q change in real GDP.

The decline in the total index reflected broad-based component weakness. Production weakened to the lowest point since October 2016. New orders similarly declined to the lowest point since January of last year, and order backlogs were at an 11-month low. Working higher were the inventories and supplier delivery indexes. The index showed much slower product delivery speeds versus early-2016.

The jobs index increased moderately and remained up sharply from the June 2016 low. Twenty-one percent of firms (NSA) reported higher payrolls while eight percent reported them lower. 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 improved slightly to 69.9 from its six-month low. A strengthened forty-eight percent (NSA) of respondents reported paying higher prices while a steady 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) Mar Feb Jan Mar '17 2017 2016 2015
General Business Barometer 57.4 61.9 65.7 57.1 60.8 53.1 50.3
ISM-Adjusted General Business Barometer 59.3 60.7 65.9 56.8 59.0 52.0 51.6
  Production 55.2 67.9 73.4 61.0 64.3 54.7 52.5
  New Orders 58.6 62.9 66.4 59.9 63.5 55.7 50.4
  Order Backlogs 50.7 52.0 55.1 49.3 55.2 47.2 44.4
  Inventories 59.5 54.9 63.5 57.6 54.9 47.2 52.1
  Employment 59.4 56.1 60.7 50.5 52.9 49.4 50.3
  Supplier Deliveries 63.8 61.5 65.3 55.1 59.4 52.8 52.5
  Prices Paid 69.9 65.0 72.1 63.1 64.0 53.2 46.8
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