MNI DATA IMPACT: May Chicago Biz Falls Further, Hits 38-Yr Low

-- Chicago Business Barometer 32.3 in May vs 35.4 in April

-- Order Backlogs Plummet; Production and New Orders at 40-year lows 

By Irene Prihoda

     LONDON (MNI) - The Chicago Business Barometer fell to the lowest level in

almost four decades in May, as the US economy continued to be buffeted by the

effects of Covid-19.

     Among the main five indicators, Order Backlogs and Supplier Deliveries saw

the largest declines, while Employment edged marginally higher.

     The main points of note from the release follow:

     - The headline index slipped 3.1 points in May to 32.3, its lowest level

since March 1982, as business confidence cooled further amid the Covid-19

crisis.

     - Demand tumbled further into contraction in May after seeing the largest

fall on record in April. New Orders dropped by 2.3 points to 21.9, the lowest

since July 1980. Similarly, Production ticked down 1.6 points in May to 23.7

after falling sharply in the previous month. The index remained at a 40-year low

as firms reported pandemic-induced temporary shutdowns.

     - Order Backlogs saw the biggest drop, down 10.4 points to 26.9, the lowest

level since March 2009. This marks the ninth consecutive sub-50 reading.

     - Inventories rose further in May, with firms noting a higher level than

needed. The index gained 4.1 points to reach an eleven-month high of 52.3.

     - Employment edged up 3.2 points to 37.0. However, anecdotal evidence was

mixed with some firms stating they had to lay off staff or reduce salaries,

while others were trying to find new hires.

     - Supplier Deliveries pared down by 4.6 points in May but remain elevated.

The index stood at 74.3 after recent high in April 2020.

     - Prices paid at the factory gate increased to 53.8, its highest level

since March 2020. Companies noted higher prices for essential goods and

transportation.

     - This month's special question asked: "How long do you expect COVID-19 to

impact your business plan(s)?" Opinions diverged, with the majority, at 27.1%,

expecting Covid-19 to have an impact for 6-9 months, while 22.9% forecast

9-12months and 20.8% project 3-6 months. While 18.8% expect an impact on

business plans for more than a year, only 10.4% see the impact last for less

than 3 months.

     - The Maysurvey ran from May 1 to 18. 

--MNI London Bureau; +44 0203 865 3814; email: irene.prihoda@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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