Economy
Chicago Business Barometer Tumbles in July
Written by Sandy Williams
July 31, 2017
The Chicago Business Barometer dropped nearly 7 points in July, falling to 58.9 from 65.7 in June and ending a run of five consecutive increases. All components of the indicator receded, but remained above 12-month averages.
The July Barometer “should be viewed in the context of the underlying, upward trend in business sentiment witnessed since early 2016,” said Jamie Satchi, economist at MNI Indicators. Despite the reversal from June’s reading, key indicator averages suggest continued robust confidence among U.S. firms, he added.
New orders fell to 60.3, their lowest level since February, and production, at 60.8, was at its lowest since April. Backlogs were down 4.9 points from June’s 23-year high to 57.9. Supplier deliveries were somewhat shorter for the first time in five months.
Inventory levels rose as demand softened adding 3 points to the inventory indicator. Employment levels slipped 4 points to 52.6 after a mild decrease of 0.5 points in June, but continued to be above the 12-month average of 52.1. Inflationary pressure picked up in July, pushing the indicator for factory gate prices up 3.4 points for an index reading of 60.9.
The Chicago Business Barometer, published monthly by MNI Indicators and also referred to as the Chicago PMI, 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 U.S. gross domestic product. 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.
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Sandy Williams
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