Chicago ISM Archives - Shopfloor

ISM-Chicago Suggests Faster Manufacturing Growth in the Midwest

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The Chicago Business Barometer from ISM-Chicago and Deutsche Börse rose from 50.0 in December to 55.6 in January. In essence, this suggests that manufacturing activity in the Midwest shifted from being relatively flat over much of the past four months to modest growth as we start 2013.

The pace seen in December is the fastest experienced since April. This follows data from the Federal Reserve Bank of Chicago that said that production picked up as we ended 2012, particularly in the motor vehicle sector.

Stronger sales and production data were behind the higher Barometer figure in January. The index of new orders rose from 50.4 to 58.2, and the production measure increased from 52.4 to 60.9. The other bit of good news is on the hiring front. The employment index shifted from a contraction in December (46.8) to growth in January (58.0), with the latest figure the highest since June. Capital equipment purchases also improved over last month’s average.

In contrast to these more-positive figures, the backlog of orders continues to decline. The order backlog index improved slightly from 45.1 to 46.6, but is still below the threshold of 50 which would indicate growth. Likewise, supplier deliveries were essentially unchanged, falling from 52.8 to 49.9 (or just barely contractionary).

Chad Moutray is chief economist, National Association of Manufacturers.

Strong, But Unexpectedly Weaker, Growth in Manufacturing in Chicago Region

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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.