The Chicago Business BarometerTM, produced with MNI, tumbled -8.2 points to a six-month low of 40.4 in May. The headline index has now been in contractionary territory for nine consecutive months.
All subindexes softened in May, with Order Backlogs experiencing the most pronounced contraction. All subindexes except Supplier Deliveries and Prices Paid were in contractive (sub-50) territory this month.
Source: MNI / ISM Chicago
PRODUCTION DETERIORATES
Production slumped by -8.3 points to 39.6 in May, more than reversing the April rebound. Anecdotal evidence suggested firms’ customers were seeing a marked slowdown in business activity. Rising financing costs was flagged as slowing customer activity, particularly residential investment.
New Orders declined by -6.0 points to a six-month low. This is the second lowest print since June 2020. Firms cited customers having previously overordered.
Order Backlogs fell -15.1 points to the lowest level since May 2020. Automotive backlogs remained elevated.
PRICES PAID AT AUGUST 2020 LOW
Prices Paid cooled by -9.4 points to 60.9, the softest since August 2020. Weak demand was cited as the key downwards driver of prices. The passthrough of lower commodity prices from suppliers remained slow and moderate.
Employment softened by -2.7 points to 48.5 in May. The subindex has been in contractive territory for nine months now barring April, as firms struggle to hire and retain staff.
The survey ran from May 1 to 15.
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