Chicago Business Barometer improves but still contracts in October

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.