The MNI Chicago Business Barometer, the Institute for Supply Management’s gauge of factory activity in the Midwest region fell to 55.8 in July. down from 56.8 the month prior. Wall Street expected a larger decline to a reading of 54.0.
Readings above 50 point to expansion, while those below indicate contraction.
“Demand and output softened somewhat in July following a solid showing in June but still outperformed the very weak results seen earlier in the year,” said Lorena Castellanos, senior economist at MNI Indicators. “On the upside, it was the first time since January 2015 that all five Barometer components were above 50.
Employment index moved above 50 to the highest since March 2016 after three months in contraction that had left the indicator at the lowest since November 2009. Following strong gains in the previous month, Production, New Orders and Order Backlogs declined somewhat in July, but remained above May’s levels, when they all fell into contraction territory
“Although it’s still relatively weak, should July’s increase hold then it could be read as a tentative sign of growing business confidence about economic growth ahead,” Castellanos added.