SUV parts are fabricated in the stamping facility at the General Motors Assembly Plant on June 9, 2015. (Photo: Reuters)
The MNI Chicago Business Barometer, also known as the Chicago PMI, remained unchanged at 58.9 in August, still beating the 58.6 consensus forecast. That’s the joint-lowest level (matching July’s reading) since April.
New Orders and Production increased to their highest levels since June after falling last month. Order Backlogs fell for the second consecutive month following the 23-year high set in June, but also remain very strong. Inventories fell by 6.4 points into contraction, hitting the lowest level since the start of the year.
“Following the sharp rise in the Barometer to a more than three-year high in June it isn’t too surprising to see activity subsequently ease somewhat. However, overall, the trend remains firm, consistent with the growth story of the U.S.,” said Shaily Mittal, Senior Economist at MNI Indicators. “The disappointment comes from the employment indicator which once again contracted, the sixth time in the last 12 months, with fewer firms expecting an increase in hiring.”
The Employment indicator, which performed markedly better since the beginning of 2017, fell for the third month in a row in August. It’s now below 50 for the first time since March.
The Institute for Supply Management this month asked a special question about firms’ current inventory levels. Sixteen (16%) of firms said they were carrying too little, while the majority, 57.4%, said their inventory level was about right. The remaining 26.2% of firms reported stock levels to be too high.
When the same question was posed in November 2015, 44.2% of firms said inventories were too high, while 53.9% said they were at the right level. That meant only 2% deemed their stock levels to be limited juxtaposed to the current year where higher demand expectations have pushed firms to keep higher inventories.
The MNI Chicago Business Barometer, which can be very volatile, tracks both manufacturing and non-manufacturing sectors of the economy in the region.
