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The Chicago Business Barometer cooled slightly in August after July's sharp rebound, falling short of market expectations looking for another uptick.
Among the five main indicators, Order Backlogs was the only category to show a monthly decline, while Supplier Deliveries recorded the largest gain.
The main points of note from the release follow:
The headline index eased 0.7 points to 51.2 in August which was the lowest reading since June. This was the second straight reading above the 50-mark, after having sat below it for a full year, as firms stated that business activity picked up further in August.
Production improved further in August, increasing 1.4 points to 52.0 which is the highest level since June 2019. Companies noted that previously pushed out orders led to an increase in production. Demand improved as well in August with New Orders edging up to a one-year high of 53.5. Anecdotal evidence suggests that the industrial and agricultural sector were hit the hardest and recovered only slowly, while the medical sector is faring very well.
The backlog of work cooled 1 point to 46.2 in August following a strong increase in the previous month. The indicator has been in contraction since August 2019.
Inventories fell 9 points to 37.3 in August, hitting the lowest level since March, indicating that companies continue to run down their stocks.
Employment ticked up 0.9* points to 41.1 but remains in contraction for a fourteenth straight month. Firms noted again staff reductions due to the Covid-19 crisis.
Supplier Deliveries rose 4.2 points to 64.5 after having eased for three consecutive months. Supplier Deliveries surged due to the pandemic, with delivery times peaking in April and only falling slowly since.
Prices paid at the factory gate decreased to 55.0 in August after three consecutive months of gains.
This month's special question asked: "When do you expect to get back to normal capacity?" The majority, at 55.6% forecast operating at full capacity in 2021 or later, while 26.7% are back at normal capacity already. Only 8.9% of respondents forecast to utilize their full capacity in Q3 2020 and Q4 2020, respectively.
The survey ran from August 3 to 17.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.