Chicago Business Barometer improves but still contracts in October

The Chicago Business Barometer’s October reading still indicates a cooling in general business activity despite posting a surprise gain.

Midwest business activity increased by more than expected this month. The Institute for Supply Management (ISM) and Market News International (MNI) reported a Barometer reading of 43.8 for October, up from 40.6 in September. The survey period was Oct. 1-14.

The Barometer is a diffusion index, where a reading above 50 indicates improving business conditions and a reading below that indicates softening. Summarizing current business activity in the region, it is considered a leading indicator of the broader US economy.

The index has remained below 50 for 23 consecutive months.

Subindices

The headline index rebounded more than expected, driven by a 6.2-point surge in new orders that helped recover ground lost in September.

Production also picked up, rising 3.8 points, while order backlogs climbed 5.4 points to their highest level since November 2023.

The employment index edged up 1.3 points, though the share of firms reporting increased hiring hit its lowest mark since February.

Meanwhile, inventories jumped 12 points, fully reversing two months of declines and reaching the highest level since May.

Special question

The report inquired about the impact of current economic and market conditions on sourcing strategies and supplier relationships. More than a third (39%) said there’s been a moderate impact, and another 14% said they had been impacted in a major way. Still, 25% said the impact was minor, and only 11% said the economic and market conditions had yet to affect them.

David Schollaert

David Schollaert is deputy editor-in-chief for Steel Market Update. David joined SMU after more than a decade in the metals and mining industry in a myriad of different roles. Much of his early experience and expertise were within the coverage and analysis of steel-making raw materials and served previously as senior editor of the CRU Prices Service. Most recently, however, before his return to market analysis, David held roles as a metals buyer and an operations manager for raw material suppliers. He can be contacted at david@steelmarketupdate.com or 724-720-1008.