The Institute for Supply Management-Chicago and Deutsche Börse reported that its Chicago Business Barometer edged higher from 49.9 in October to 50.4 in November. While this suggests a minor expansion in manufacturing activity in the region, the various subcomponents provide mixed comfort.
Production rose from 51.8 to 54.7, and employment increased from 50.3 to 55.2. Both of these figures represent a nice improvement, with modest growth in output and hiring lifting the sector from the near-stalled levels seen in the month before. Much of the advancement stemmed from progress in the auto industry. At the same time, the pace of new orders slipped back into contraction (from 50.6 to 45.3). To the extent that sales are a proxy for future activity, this could mean that the gains seen in November might be temporary.
Indeed, the sample comments tend to highlight the anxieties of Midwestern manufacturers. One respondent said, “Business sales been slowing throughout the year, and continue to slow, but now at an increasing rate, becoming very alarming.” Another specifically noted concerns over the fiscal cliff. Even with these sentiments, however, other manufacturers were more cautiously optimistic about output next year, with at least one of them experiencing strong demand right now.
Chad Moutray is chief economist, National Association of Manufacturers.