Economy
Chicago Business Barometer Surprises With Decline
Written by Sandy Williams
April 30, 2019
Business activity unexpectedly declined in the Chicago area, according to the latest MNI Chicago Business Barometer survey. The Barometer, a survey of purchasing and supply management professionals in the Chicago area, lost 6.1 points, falling to 52.6 in April and to its lowest level since January 2017.
“This was a disappointing start to the second quarter, with more firms cutting back on both production and employment against a backdrop of softer domestic demand and the global slowdown,” said Shaily Mittal, Senior Economist at MNI. “Most Barometer components have dived below their respective 12-month averages, pointing towards greater business uncertainty among firms.”
Four of the five Barometer components dropped in April except for order backlogs, which pulled out of a March contraction. MNI noted reports of increased lead times, both domestically and offshore, that put pressure on backlogs. After remaining fairly steady in the past two years, supplier delivery times shortened to the lowest reading since April 2017.
New orders eased for a second month, falling below the three- and twelve-month averages. The production component retreated to its lowest level since May 2016.
Factory gate prices fell to the lowest level since March 2016 with lower steel prices cited as a contributing factor.
Inventories continued to decline, but to a lesser degree than in March. The inventories component posted below the 50-mark for the third time in nine months.
Employment dropped to the October 2017 level as demand and production declined. In a special question about hiring activity, just over half of participants said they have plans to hire more workers, a third said current levels were sufficient, and the rest were unsure of future hiring plans. Firms expressed a preference for hiring part-time and temporary employees.
Sandy Williams
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