U.S. Chicago Business Barometer Improves in June
by:Tom Moeller
|in:Economy in Brief
Summary
- Index rise is minimal after sharp decline.
- Component changes are mixed.
- Prices paid index falls to three-year low.
The ISM-Chicago Purchasing Managers Business Barometer rose to a seasonally adjusted 41.5 during June after falling to 40.4 in May but remained below 50 (the break-even point for rising vs. falling activity) for the tenth consecutive month. The index peaked at 71.3 in May 2021. A reading of 43.7 had been expected in the Action Economics Forecast Survey.
Haver Analytics constructs an ISM-Adjusted Chicago Business Barometer with methodology similar to the ISM Composite Index. This measure fell to 43.0 in June from 44.8 in May, indicating a decline in business activity overall in recent months. The latest reading remains below a 64.4 high in October 2021.
The order backlog measure improved to 33.1 after collapsing to 30.4 in May. Eighteen percent (NSA) of survey respondents reported larger backlogs while 50% reported them smaller. The production measure rose to 42.6 after falling sharply to 39.6 in May. A greatly improved 22% of survey respondents reported higher production while an increased 39% reported it lower.
To the downside, the employment index fell to 45.6 after declining to 48.5 in May. An increased 19% of firms reported higher payrolls while a higher 27% reported a decline. The new orders reading of 39.6 was reduced from 39.7 in May and was the lowest reading in seven months. Twenty-five percent of respondents reported higher order levels while 46% reported a decline. The supplier-delivery series eased to 48.8 from 52.1. The inventories index fell to 38.2 this month from 44.3 in May. It had surged to 58.5 in March.
Inflation pressures continued to diminish in June. The prices paid index weakened to 53.5 from 60.9 in May and remained at the lowest level since April 2020. The index remained below the high of 94.6 in November 2021. A greatly lessened 29% (NSA) of respondents reported an increase in prices, compared to 55% in April, while a much higher 21% reported lower prices.
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.
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
