U.S. Chicago Business Barometer Dips in October; Below 50 for the 14th Straight Month
Summary
- Index ticks down to a three-month-low 44.0 in Oct., w/ production down 4.6 pts. to 46.5.
- Production contracts for the first time since July and new orders contract for two successive months, while employment expands for the first time since April.
- Prices paid index rises to 60.1, remaining at a high level.
The ISM-Chicago Purchasing Managers Business Barometer slipped to a three-month-low 44.0 in October from 44.1 in September and 48.7 in August. The index had remained below the 50 expansion-contraction dividing line since September 2022. The latest reading was also below 45.9 in October 2022 and significantly down from a 71.3 peak in May 2021. The Action Economics Forecast Survey had expected 45.5 for October.
Haver Analytics constructs an ISM-Adjusted Chicago Business Barometer with methodology similar to the ISM Composite Index. This measure increased to 46.2 in October after falling 5.0 pts. to 45.1 in September; nevertheless, having remained below 50 for the 13th time in 14 months. The latest level, while up from a 41.4 low in July, was down from 49.5 in October 2022 and a 64.4 high in October 2021.
The production index fell to a three-month-low 46.5 in October from 51.1 in September, indicating production contracted this month after expanding in the previous two months. The latest reading, while up from a 36.6 low in November 2022 and 45.1 in October 2022, remained well below a 70.4 high in April 2021. A lessened 20% of respondents (NSA) reported higher production while an increased 27% reported a decline. The new orders index rebounded to 42.2 this month after plunging 17.6 pts. to 38.0 in September, showing contraction in new orders for the 16th time in 17 months but at a less severe pace. The index was slightly above 40.1 in October 2022 but significantly below a 77.0 peak in May 2021. A lessened 13% of respondents (NSA) reported higher new orders while 30% reported a decrease.
The order backlogs index slipped to 39.1 in October after rising 10.5 pts. to a five-month-high 39.4 in September; it remained below 49.1 in October 2022 and a 75.0 peak in October 2021. The inventories index increased slightly to 44.8 this month from 44.2 in September, showing the seventh straight monthly contraction; it was below an expansion-level 57.2 in October 2022 and a 66.6 peak in May 2022. The supplier deliveries index declined to 47.4 in October after rising 2.6 pts. to 47.9 in September; it was also modestly down from 59.3 in October last year.
On the labor front, the employment index recovered to a six-month-high 50.2 in October from 44.5 in September, indicating employment expanded this month after five months of contraction. The index was up from a contraction-level 45.8 in October 2022 but down from a 56.7 high in October 2021. Twelve percent of respondents (NSA) reported higher employment while 12% also reported less hiring.
Inflation pressures increased this month. The prices paid index rose to 60.1 in October after dropping 14.5 pts. to 59.5 in September. However, the index was down from 74.0 in October 2022 and a 94.6 peak in November 2021. Twenty-eight percent of respondents (NSA) reported higher prices paid while only 9% reported price declines.
The Chicago Business Barometer is considered to be a leading indicator of the U.S. economy. An indicator reading above 50 indicates expansion while 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.
Winnie Tapasanun
AuthorMore in Author Profile »Winnie Tapasanun has been working for Haver Analytics since 2013. She has 20+ years of working in the financial services industry. As Vice President and Economic Analyst at Globicus International, Inc., a New York-based company specializing in macroeconomics and financial markets, Winnie oversaw the company’s business operations, managed financial and economic data, and wrote daily reports on macroeconomics and financial markets. Prior to working at Globicus, she was Investment Promotion Officer at the New York Office of the Thailand Board of Investment (BOI) where she wrote monthly reports on the U.S. economic outlook, wrote reports on the outlook of key U.S. industries, and assisted investors on doing business and investment in Thailand. Prior to joining the BOI, she was Adjunct Professor teaching International Political Economy/International Relations at the City College of New York. Prior to her teaching experience at the CCNY, Winnie successfully completed internships at the United Nations. Winnie holds an MA Degree from Long Island University, New York. She also did graduate studies at Columbia University in the City of New York and doctoral requirements at the Graduate Center of the City University of New York. Her areas of specialization are international political economy, macroeconomics, financial markets, political economy, international relations, and business development/business strategy. Her regional specialization includes, but not limited to, Southeast Asia and East Asia. Winnie is bilingual in English and Thai with competency in French. She loves to travel (~30 countries) to better understand each country’s unique economy, fascinating culture and people as well as the global economy as a whole.
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