Economy

Chicago Business Barometer Takes Unexpected Tumble

July 31, 2014

The Chicago Business Barometer plunged 10 points to 52.6 in July, falling at the quickest rate since October 2008 and to the lowest level since June 2013. The fall surprised Bloomberg economists who were expecting the Index to rise slightly to 63 from a reading of 62.6 in June.

The decline was attributed to a “collapse in production and the ordering components” according to the July 31 report by MNI and ISM.

Purchasing managers said they saw the downturn as a “lull” rather than a downward trend given the strong performance in recent months. New orders and backlogs both showed significant setbacks.

Employment rose despite the drop in production. Inventory growth was slower in June and prices paid fell for the second month in a row.

“The surprise fall in the Chicago Business Barometer in July, following a strong second quarter, naturally raises questions about the sustainability of the recovery,” said Philip Uglow, Chief Economist at MNI Indicators. “Some feedback from panelists points to this being a temporary setback, although we’ll need to see the August data to judge to what extent this is a blip.“

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