U.S. Chicago Business Barometer Up in June to a Seven-Month High; Still Below 50
Summary
- 47.4 in June vs. 35.4 in May; 5.4 pts. above the year-to-date average of 42.0.
- All the five subindexes increase in June but three remain below 50.
- New Orders (45.6, the 9th contraction in 10 mths.), Employment (44.1, the 7th straight contraction), Order Backlogs (40.5, the highest reading since Nov.), Production (54.6, the first expansion since Dec.), and Supplier Deliveries (50.7, the first above 50 since Jan.).
- Prices paid index falls 11.9 pts. to 56.5, a one-year low.
The ISM-Chicago Purchasing Managers Business Barometer rose to 47.4 in June from 35.4 in May and 37.9 in April. Following six consecutive m/m declines, the June reading was the first m/m rise to the highest level since November 2023; thus, indicating contraction this month but at a less severe pace. 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, while above 41.8 in June 2023, was significantly down from a peak of 72.1 in July 2021. The Action Economics Forecast Survey had expected 40.0 for June.
Haver Analytics constructs an ISM-Adjusted Chicago Business Barometer with methodology similar to the ISM Composite Index. This measure rose to 49.1 in June after falling to a 15-year-low 39.6 in May, registering the seventh successive monthly contraction but at a less severe rate. The index had been below 50 since September 2022, with an exception of a 55.1 high in November 2023. The latest number, while above 43.9 in June 2023, remained below a high of 64.2 in December 2021.
Three of the five subindexes remained below the critical 50 level this month. The new orders index jumped 16.9 pts. to a four-month-high 45.6 in June, the first m/m gain since February, after plunging to 28.7 in May, showing new orders contracted for the ninth time in 10 months but at a less severe pace. The latest number remained down from a high of 54.8 in August 2023 and a peak of 77.0 in May 2021. Twenty-three percent of respondents (NSA) reported higher new orders this month while 33% reported a decrease. The order backlogs index increased to 40.5 in June, the highest level since November 2023, after falling to 26.3 in May; nevertheless, remaining below a high of 58.2 in December 2022 and a peak of 75.2 in May 2021. The employment index rose to 44.1 in June after falling to 37.2 in May, indicating employment contracted for the seventh straight month but at a less severe rate. The index remained below a high of 52.4 in November 2023 and a high of 55.2 in October 2021. Only 6% of respondents (NSA) reported higher employment this month while 19% reported less hiring.
On the expansion side, the production index jumped 11.0 pts. to 54.6 in June after an 8.1-point increase to 43.6 in May, indicating production expanded for the first time since December 2023. The latest figure was still down from a high of 59.8 in November 2023 and a high of 69.6 in January 2021. An increased 23% of respondents (NSA) reported higher production this month while a lessened 20% reported a decline. Meanwhile, the supplier deliveries index rose to 50.7 in June after increasing to 48.1 in May, registering its first month above the 50 level since January’s 52.3.
On the inflation front, input prices continued to increase this month but at a slower rising speed. The prices paid index declined to 56.5 in June, the lowest reading since June 2023, from 68.4 in May. The index was meaningfully below a high of 74.5 in August 2023 and a peak of 96.5 in November 2021. Twenty-seven percent of respondents (NSA) reported higher prices paid in June while 13% 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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