Chicago Business Barometer Continues to Decline in March
by:Sandy Batten
|in:Economy in Brief
Summary
- Index falls to the lowest level since May 2023 and moved deeper into contraction territory.
- All component indexes remained below 50.
- The prices paid index declined but remained elevated.
The MNI Chicago Business Barometer fell 2.6 points in March to 41.4, its lowest reading since May 2023 and well below the critical 50 level that separates expansion from contraction. The Action Economics Forecast Survey had looked for the index to inch up to 46.0 in March.
Haver Analytics calculates an ISM-adjusted version of this index that gives equal weights to each of the five key component subindexes. The headline index includes the same subindexes but with varying weights. This ISM-adjusted index also fell in March to 44.0 from 44.5 in February. This index has been pointing to anemic activity for quite a while, having been above the critical 50 level in only one month since August 2022.
All the subindexes remained below the critical 50 level in March with four of the five declining from February. Only the employment subindex increased, rising 6.4 points to 47.1, but remained in contraction territory. Fifteen percent of respondents reported an increase in employment in March, up markedly from 3% in February, while 19% reported a decline vs. 27% in February. The production subindex slipped to 42.4 from 42.9 with 17% of respondents reporting an increase and 29% reporting a decrease. The new orders subindex fell 3.4 points to 43.0, its lowest reading since last September. The inventories subindex declined to 39.5 in March from 43.0 in February. And the supplier deliveries subindex slipped 1.6 points to 48.1 in March, its second consecutive month below 50, indicating that delivery times are shortening.
Input prices continued to rise in March though at a slower pace with the index slipping 2.1 points to 62.6. Thirty-five percent of respondents reported paying higher prices in March vs. 39% in February while only 4% reported paying lower prices, down from 10% in February.
The Chicago Business Barometer is considered to be a leading indicator of the U.S. economy. A reading above 50 indicates expansion while one 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.
Sandy Batten
AuthorMore in Author Profile »Sandy Batten has more than 30 years of experience analyzing industrial economies and financial markets and a wide range of experience across the financial services sector, government, and academia. Before joining Haver Analytics, Sandy was a Vice President and Senior Economist at Citibank; Senior Credit Market Analyst at CDC Investment Management, Managing Director at Bear Stearns, and Executive Director at JPMorgan. In 2008, Sandy was named the most accurate US forecaster by the National Association for Business Economics. He is a member of the New York Forecasters Club, NABE, and the American Economic Association. Prior to his time in the financial services sector, Sandy was a Research Officer at the Federal Reserve Bank of St. Louis, Senior Staff Economist on the President’s Council of Economic Advisors, Deputy Assistant Secretary for Economic Policy at the US Treasury, and Economist at the International Monetary Fund. Sandy has taught economics at St. Louis University, Denison University, and Muskingun College. He has published numerous peer-reviewed articles in a wide range of academic publications. He has a B.A. in economics from the University of Richmond and a M.A. and Ph.D. in economics from The Ohio State University.
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