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Economy in Brief

Chicago Purchasing Managers Index and Prices Paid Component Ease
by Tom Moeller  August 31, 2018

The Chicago Purchasing Managers Business Barometer fell to 63.6 during August from an unrevised 65.5 in July. The decline was to the lowest level in three months. The Action Economics Forecast Survey expected a decline to 63.0. 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 eased to 60.3 from 60.8 during July. During the last ten years, there has been a 60% correlation between the index level and the q/q change in real GDP.

The m/m change in the overall business barometer reflected mixed performance amongst the component series. The order backlog series retreated to the lowest level in four months, but the new orders series improved slightly to a seven- month high. The production series also gained slightly and continued the improvement from its March low. The inventories figure increased and made up most of its sharp July decline. The vendor delivery series fell sharply, indicating the quickest delivery speeds since December.

The employment component retreated from its four-month high. It has remained above the break-even level of 50 for 10 consecutive months. During the last ten years, there has been an 81% correlation between the index level and the m/m change in factory sector payrolls. Twenty-seven percent (NSA) of survey respondents reported higher payroll levels and 14% indicated a decline.

The index of prices paid slipped to 81.0, but remained near its 2008 high. Fifty-seven percent (NSA) of respondents reported higher prices, while two 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.

The Evolution of the Labor Share across Developed Countries from the Federal Reserve Bank of Cleveland is available here.

Chicago Purchasing Managers Index (%, SA) Aug Jul Jun Jul '17 2017 2016 2015
General Business Barometer 63.6 65.5 64.1 59.5 60.8 53.1 50.3
ISM-Adjusted General Business Barometer 60.3 60.8 61.1 56.5 59.0 52.0 51.6
  Production 68.3 68.1 64.6 62.6 64.3 54.7 52.5
  New Orders 66.1 65.9 65.4 62.1 63.5 55.7 50.4
  Order Backlogs 59.0 65.3 64.4 56.3 55.2 47.2 44.4
  Inventories 50.5 45.3 52.8 50.2 54.9 47.2 52.1
  Employment 55.4 58.3 55.2 48.1 52.9 49.4 50.3
  Supplier Deliveries 61.0 66.6 67.5 59.6 59.4 52.8 52.6
  Prices Paid 81.0 82.1 76.3 60.3 64.0 53.2 46.8
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