The Chicago Business Barometer from ISM-Chicago declined from 62.2 in December to 60.2 in January. While this still represents strong growth, it also reflects a modest easing in manufacturing activity from the November and December readings.
Production and new orders continue to be healthy, with a slightly lower value this month. Nonetheless, with values of 63.8 and 63.6, respectively, activity remains highly elevated. Capital equipment purchases and supplier deliveries picked up their pace.
Employment also eased a little, with its index declining from 59.2 to 54.7. Job growth is positive, but this represents the slowest pace of hiring since August. The only component of the index that contracted was the measure for order backlogs, which shrunk from 57.3 to 48.3 for the month.
The prices paid for raw materials decreased from 63.8 in December to 62.4 in January. This more-or-less continues some pricing relief seen since November. The larger trend has reflected a downward shift (but still elevated levels) in prices since mid-2011. The index in July, for instance, was 73.4.
Despite some easing in these numbers, manufacturing activity in the Chicago region remains strong, supported by healthy production and new orders overall. It would definitely be nice to regain the momentum seen in early 2011, though, when the Chicago Business Barometer was hovering around 70.
Chad Moutray is chief economist, National Association of Manufacturers.