U.S. Chicago Business Barometer Unexpectedly Plunges in May to a Four-Year Low
Summary
- 35.4 in May vs. 37.9 in April.
- All the five subindexes remain below 50.
- New Orders (28.7, lowest since May ’20), Employment (37.2, lowest since June ’20), Production (43.6, contracting for the fifth straight month), Order Backlogs (26.3, a four-year low), and Supplier Deliveries (48.1 vs. 47.3).
- Prices paid index dips 0.9 pt. to 68.4, remaining at an elevated level.
The ISM-Chicago Purchasing Managers Business Barometer fell to 35.4 in May from 37.9 in April and 41.4 in March. The May reading was the sixth consecutive m/m fall to the lowest level since May 2020. The index had been below the 50 expansion-contraction dividing line since September 2022, with an exception of a 55.6 high in November 2023. The latest reading was also below 40.8 in May 2023 and significantly down from a peak of 72.1 in July 2021. The Action Economics Forecast Survey had expected 40.8 for May.
Haver Analytics constructs an ISM-Adjusted Chicago Business Barometer with methodology similar to the ISM Composite Index. This measure slid to 39.6 in May after falling to 41.0 in April, registering the sixth successive m/m slide to the lowest level since June 2009. The index had been below 50 since September 2022, with an exception of a 55.1 high in November 2023. The latest number was also below 45.2 in May 2023 and a high of 64.2 in December 2021.
All the subindexes remained below the critical 50 level in May. The new orders index plunged 9.2 pts. to 28.7 in May after falling 5.1 pts. to 37.9 in April, showing new orders contracted for the eighth time in nine months and at the most severe pace since May 2020. The latest number was well below a high of 54.8 in August 2023 and a peak of 77.0 in May 2021. Only 8% of respondents (NSA) reported higher new orders in May while a sizeable 48% reported a decrease. The employment index fell to 37.2 in May from 38.6 in April, indicating employment contracted for the sixth consecutive month to the lowest level since June 2020. The index was down from a high of 52.4 in November 2023 and a high of 55.2 in October 2021. Only 7% of respondents (NSA) reported higher employment in May while an increased 33% reported less hiring.
The production index increased to 43.6 in May after a 6.9-point decline to 35.5 in April, indicating production contracted for the fifth straight month but at a less severe pace. The latest figure was down from a high of 59.8 in November 2023 and a high of 69.6 in January 2021. A lessened 13% of respondents (NSA) reported higher production in May while 25% reported a decline. The order backlogs index fell to 26.3 in May, the lowest level since May 2020, after increasing to 34.3 in April; it remained below a high of 58.2 in December 2022 and a peak of 75.2 in May 2021. Meanwhile, the supplier deliveries index increased to 48.1 in May, its fourth straight month below 50, after declining to 47.3 in April.
On the inflation front, input prices continued to rise in May. The prices paid index edged down to a still-elevated 68.4 in May following a 6.7-point jump to 69.3 in April. The index was down from a high of 74.5 in August 2023 and a peak of 96.5 in November 2021. Forty-one percent of respondents (NSA) reported higher prices paid in May while 0% 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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