Manufacturing Activity in Chicago Area Continues to Soften

by webmaster

According to a survey compiled by MNI Indicators, manufacturing activity in the Chicago area showed signs of further weakening in July, although at a slower pace compared to previous months.

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Chicago Business Barometer

The Chicago Business Barometer rose to 42.8 in July from 41.5 in June, falling short of economists’ expectations of 43.3. However, this marked the second consecutive month of contraction relaxation.

Assessing Business Conditions

The barometer, based on surveys conducted with firms in the Chicago area, provides insights into business conditions. It consists of various components such as new orders, order backlogs, production, supplier deliveries, and employment. A reading below 50 indicates a contraction in activity. In this report, all subindexes remained in negative territory except for prices paid.

Factors Driving the Uptick

The increase in the barometer was primarily driven by new orders, which experienced a rise of 3.4 points compared to the previous month. The production index also continued to improve in July following a rebound in June, and order backlogs saw improvement as well. It is important to note that the higher readings were mainly due to a reduction in negative responses rather than an increase in positive ones.

Decline in Employment Index

However, the employment index decreased by nearly six points, reaching one of its lowest points this year. Additionally, supplier deliveries fell to their lowest level since 2009. While this suggests a possible easing of previously tight supply chains, it also reflects general economic weakness.

Prices Paid Showing Positive Trend

One positive aspect revealed by the survey was the increase in prices paid, which climbed nearly nine points to reach a reading of 62.1.

In conclusion, while manufacturing activity in the Chicago area continued to soften in July, there were some modest improvements in certain areas. However, with the decline in the employment index and weakening supplier deliveries, there is still cause for caution in assessing the overall economic landscape.

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