Economy
Chicago Business Barometer at Highest Level in Over Two Years
Written by Sandy Williams
April 29, 2017
The Chicago Business Barometer in April reached its highest level since January 2015, posting a score of 58.3 from 57.7 in March.
Growing demand for manufactured products pushed new orders up 5.5 points to a near three-year high. The production index in April was at another high level although receding slightly to 59.5 from 61.7.
Backlogs contracted for the fifth month and at a faster rate than recent months. Supplier delivery times lengthened, with the index moving 1.6 points higher to 56.0
Prices paid were up 14 percent year over year, but increased at a slower pace in April. Factory gate prices eased somewhat during the month.
Employment levels expanded in April pulling out of contraction after falling below the neutral 50 mark in March. The employment index expanded only seven times in the last 24 months but two of those have been in the last three months.
A recent hike in interest rates was not of great concern to survey respondents. More than half of those responding to the special question said they expect to remain unaffected.
“The April Chicago report showcased another impressive month, with firms reporting solid growth. Rising demand and firm production led to a pick-up in hiring by firms. Although the employment indicator has been bumpy, in and out of contraction, if the current month’s rise is sustained, it could provide a boost to the labor market,” said Shaily Mittal, senior economist at MNI Indicators.
The Chicago Business Barometer is a 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 US gross domestic product (GDP). An indicator reading above 50 indicates expansion compared with a month earlier while below 50 indicates contraction. A result of 50 is neutral. The farther an indicator is above or below 50, the greater or smaller the rate of change.
Sandy Williams
Read more from Sandy WilliamsLatest in Economy
SMU Community Chat: Tariff-induced panic purchases, inflation, and calculating costs
Chief executive of the Institute for Supply Management (ISM), Tom Derry highlighted how reactive buying behavior has shifted the market into a quiet demand period. Derry presented ISM data during the weekly SMU community chat.
Architecture billings still sluggish despite project inquiry uptick
The Architecture Billings Index (ABI), a leading indicator for non-residential construction activity, declined for an eighth straight month in June.
Beige Book: Tariff pressures mount, flat outlook
All districts reported “experiencing modest to pronounced input cost pressures related to tariffs, especially for raw materials used in manufacturing and construction.”
Steel exports recovered in May but still historically low
US steel exports rose 10% from April to May but remained low compared to recent years. This came just one month after exports fell to the lowest level recorded in nearly five years.
AISI: Raw steel production ticks up near recent high
The volume of raw steel produced by US mills inched higher last week, according to the American Iron and Steel Institute (AISI). After steadily increasing in April and May, domestic mill output stabilized in early June and has remained historically strong since.