Manufacturers/End Users

Chicago Business Barometer drops in August
Written by David Schollaert
August 29, 2025
The Chicago Business Barometer remains in contraction, slipping 5.6 points to 41.5 in August.
The Barometer is a diffusion index, where a reading above 50 indicates improving business conditions and a reading below that indicates contraction. Summarizing current business activity in the region, it is considered a leading indicator of the broader US economy.
A sharp pullback in new orders and dips in employment, production, and order backlogs drove the weaker index reading, according to the latest report by Market News International (MNI) and the Institute for Supply Management (ISM).
However, the reduction was partly offset by an uptick in supplier deliveries.
August’s Barometer reading trails March’s 47.6, a year-to-date high, by 6.1 points. This marks the 20th consecutive month that the PMI is below 50 points, signaling contraction.
New orders fell 10.8 points, its sharpest drop in nearly two years. Employment was 5.9 points lower, production compressed by 3.6 points, and production waned by 3.6 points.
The prices paid reading was down 8.3 points for the second straight month, though it remains above last year’s average. Still, supplier delivers increased for a second straight month, ticking up 5.8 points.
The survey asked respondents to name by when they expect to have clarity on input costs, considering the uncertainty around tariff policy. Of those polled, 31% reported that they estimate to have clarity within the next three to six months. The remaining were equally split at 23% each between the next three months, more than six months, and unknown.
Thirty-five percent of the survey respondents stated they are reconsidering sourcing or adding automation, AI, or digital technology in 2025 due to high labor costs. Another 27% said they still intend to source or add such options this year.
 
			    			
			    		David Schollaert
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