The Chicago Business Barometer from ISM-Chicago rose from 52.9 in June to 53.7 in July. This improvement was mainly due to a pickup in new orders, with the index increasing from 51.9 to 52.9. Still, this is a far cry from the 69.2 reading observed in February, which was followed by four consecutive monthly declines before July’s increase.
Unfortunately, many of the other subcomponents of the ISM-Chicago survey mirrored weaknesses seen in other indicators. Current production, inventories, employment, and capital spending all grew at a slower pace in July. The index for production, for instance, declined from 57.0 to 54.5.
The sample comments tend to echo this more-downbeat assessment. Many of the responses noted slower economic growth and rising uncertainties in the marketplace. While a couple of them observed higher sales, others tended to say that new orders were “erratic,” “softening,” “slower,” or “quiet.” In trying to explain the lower levels of activity, one individual said, “Summer vacations? Election year? Euro crisis? I wish I knew.” Indeed, these comments highlight the anxieties that we hear from manufacturers in other regions, as well.
Tomorrow, we will receive new data from the Institute for Supply Management’s national Purchasing Managers’ Index. In June, the PMI contracted for the first time since the official end of the recession. It will be interesting to see if the ISM-Chicago’s numbers foreshadow modest improvements, even as the larger picture remains weak.
Chad Moutray is chief economist, National Association of Manufacturers.