The Chicago Business Barometer from ISM-Chicago and Deutsche Börse observed a pickup in manufacturing activity in the region in August. The purchasing managers’ index rose from 52.3 in July to 53.0 in August. This was the second consecutive increase in sentiment after a spring slowdown.
Higher sales were the largest driver, with the new orders index up significantly from 53.9 to 57.2. This was the fastest pace since February, as as such, it bodes well for increased output in the coming months. This suggests an improvement in the auto sector, which heavily dominates this measure. As such, it provides a different view of the region than was seen in the July Midwest Manufacturing Index for July, which was released earlier in the week, and it perhaps indicates that motor vehicle sales accelerated somewhat in August.
With that said, several of the other measures decelerated a bit for the month, even as they still relfect modest growth. The production index, for instance, declined from 53.6 to 53.0, with the employment figure down from 56.6 to 54.9. Inventories and the order backlog both declined at a slower pace, and raw material costs remained slightly elevated from where they were earlier in the year.
Chad Moutray is the chief economist, National Association of Manufacturers.
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