Chicago Business Barometer tumbled by 6.5 points in September, entering contractionary territory for the first time since June 2020.
The Chicago Business BarometerTM, produced with MNI, descended to a more than two-year low in September. The indicator tumbled by 6.5 points to 45.7, entering contractionary territory for the first time since June 2020.
All main indicators fell in September, with production, new orders, order backlogs, employment and supplier deliveries all weakening to Summer 2020 lows. The largest declines were recorded in employment, order backlogs and production sub-indices.
Source: MNI / ISM
PRODUCTION SLUMPEDProduction slumped by 10.4 points to 44.5 in September, giving back all the recovery (and more) from August. Continued supply-chain issues alongside slowing new orders contributed to lower production for the month, experienced by over a quarter of respondents.
New Orders contracted for the fourth consecutive month, slipping by 6.7 points to 42.2. Softening demand was cited. Order Backlogs slowed by 12.6 points to 41.9 as weak new orders saw production shift to working through remaining orders.
Supplier Deliveries moderated by a further 2.3 points to 59.8. This was the lowest since July 2020 as deliveries remained unstable and lead times long. Inventories weakened by 8.6 points to 53.0, over five points below the 12-month average.
Inventories remain very high, as firms cite having overstocked previously due to supply issues. As demand for materials slows alongside lower sales projections, suppliers are requesting orders to maintain relationships.
EMPLOYMENT ENTERED CONTRACTIONARY TERRITORY
Employment recorded the starkest decline in September, dropping 14.4 points to 40.2 in September and re-entering contractive territory.
Prices Paid softened in September by 7.7 points to 74.1. Price Paid was the lowest since November 2020 and signals a more substantial slowing of prices charged related to an early sign of contracting demand in specific products.
The survey ran from September 1 to 20.