Economy

Chicago Business Barometer Loses April Gains

May 30, 2015

The Chicago Business Barometer lost its gains of April, falling back into contraction in May. The Barometer dropped 6.1 points to a reading of 45.2, down from 52.3 last month.

The Barometer began slipping in October 2014 from its high of 55.2. Its strongest reading in 2015 was in January at 59.4 before plunging to 45.8 in February.

“We had thought that the April bounce was consistent with a partial return to normal following the weather and port related slowdown in the first quarter,” commented Philip Uglow, Chief Economist of MNI Indicators. “The latest data for May, however, suggest that this was a false dawn and that sluggish activity has carried through to the second quarter.”

All five of the components of the barometer weakened in May with all of them below the 50 neutral point. New orders fell 13.8 percent to 47.5. Production and employment indexes fell by double digits in May. Order backlogs remained in contraction

Prices appeared to gain strength, jumping back into expansion and to their highest level since December. Inventories eased somewhat in May but 42 percent of companies surveyed said current levels were too high, 53.2 percent said they were about right and less than 5 percent reported inventories as too low.

The Chicago Business Barometer, published by MNI Indicators in association with the Institute for Supply Management (ISM), is a leading indicator of economic activity based on survey responses from purchasing/supply chain professionals drawn primarily from the ISM-Chicago membership. The composite diffusion indicator made up of the Production, New Orders, Order Backlogs, Employment and Supplier Deliveries indicators and is designed to predict future changes in gross domestic product (GDP). A reading above 50 indicates expansion, below 50 contraction and at 50 neutral or no change.

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