The Chicago Business Barometer from ISM-Chicago and Deutsche Börse declined from 52.4 in March to 49.0 in April. This is the lowest value for the index since 2009, with the report indicating that manufacturing activity in the region contracted for the first time in 3½ years. As such, it stands in contrast to the Midwest Manufacturing Index from the Chicago Federal Reserve Bank, which was released yesterday and found production levels moving higher in March. It is consistent, though, with several of the other regional manufacturing surveys of late which have reported slowing in the sector.
For the ISM-Chicago report, production helped to drive the larger index lower. To illustrate the slowing of activity in this data, the index for production has fallen from 60.9 in January to 51.8 in March to 49.9 in April. The April reading indicated a slight contraction for the month, with manufacturing activity essentially stalled. Employment also declined, with its index dropping from 55.1 to 48.7. This was the first pullback in hiring since December.
On the positive side, new orders edged marginally higher for the month, up from 53.0 in March to 53.2 in April. This figure was still well-below the 60.2 reading of February. The good news is that inventory and order backlog levels continue to diminish. This should mean that activity should pick up on stronger sales data, with stockpiles so low.
Chad Moutray is the chief economist, National Association of Manufacturers.