Chicago Business Barometer™ – Weakens to 45.2 in October

Key Points – October 2022 Report

The Chicago Business Barometer™, produced with MNI, dipped a further half-point to 45.2 in October, contracting for a second consecutive month.

• After the across-the-board September plunge, most indicators saw marginal improvements in October, whilst New Orders and Supplier Deliveries slipped further. Order Backlogs and Employment recorded stronger upticks (albeit remaining in contraction).
• Production saw a marginal 0.6-point improvement to 45.1 in October yet remained a substantial 10 points below the 12- month average. Over one-third of respondents noted lower production compared to September, with continued issues over labor and material shortages cited.
• New Orders contracted for the fifth consecutive month, declining by a further 3.0 points to 39.2. Weak economic outlooks are dragging on demand. The indicator last fell below 40 in the initial pandemic shock of 2020.
• Order Backlogs recovered almost half of the September slide, increasing by 5.4 points to 47.3 in October. Responses were varied, with some seeing robust demand and others experiencing falling new orders to allow capacity to manage current backlogs.
• Employment also rose, up 5.4 points to 45.6 after recording a stark September decline. The indicator was the weakest in six months barring the September fall.
• Supplier Deliveries moderated by 0.5 points to 59.3 to near pre-pandemic levels as supply pressures continue easing.
• Inventories grew by 3.9 points to 56.9. Despite remaining high, firms are moving towards normalising levels of stock.
• Prices Paid saw a small 0.7-point uptick to 74.8 in October. This is 9.6 points below the 12-month average, implying a slower pace of trend price growth. Half of firms experienced increased prices in October, compared to around 80% in the first half of the year. Falling container costs and the strong US dollar are contributing to lower logistical costs.

SPECIAL QUESTION

This month we asked firms how they are looking to move excess inventory. Cutting back on orders from suppliers was the most heavily implemented strategy (33.3%), whilst 36.7% were not experiencing inventory level issues. Strategies involving repurposing, reselling, reducing prices and waiting saw relatively even usage by around 13-17% of firms..

Click below for the full press release:

MNI_Chicago_Press_Release_2022-10.pdf

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