Chicago Business Barometer Continues to Support Good Q2 GDP Growth

New orders and production both showed strong growth in second quarter, although new orders contributed to the Barometer’s decline in June by falling from a seven month high in May. Order backlogs were also a drain on the Barometer for the month.

Production was above 70 in June and ended with an average of 68.3, up almost 8 points from first quarter. Inventories were up for a third consecutive month with some anecdotal comments about businesses building inventories ahead of a possible longshoreman strike.

“The Business Barometer shows activity slowing a little between May and June, but it remains at a high level supported by the strength in Production and New Orders,” said Philip Uglow, Chief Economist at MNI Indicators.

“The downward revision to GDP in the first quarter was far larger than expected, and while the data now look a little historic, and the Chicago Report points to a bounceback in Q2, it does mean growth will be slower over the first half of the year than first thought. The Q3 data cycle, not least our own Barometer, will be critical in terms of determining the timing of the first hike in rates,” he added.

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{amchart id=”111″ Chicago Business Barometer Index}