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The Chicago Business Barometer increased 6.0 points to 53.6 in March, led by sharp bouncebacks in Production and Employment.
Four of the five Barometer components increased between February and March, with only Supplier Deliveries declining on the month. Movements in the Barometer and its components have been volatile over the past few months, while trend growth has remained weak. March’s positive outturn, though, left the three month trend at the highest for just over a year and the Q1 average at the highest since Q4 2014.
The increase in the Barometer was led by a very sharp rise in Production, which followed an even steeper decline in the previous month. The biggest surprise came from the Employment component which rose above the 50 mark in March and to the highest level since April 2015. This followed a period of relative weakness compared with other activity indicators.
Both New Orders and Order Backlogs also posted significant increases, with backlogs just short of moving into expansion for what would have been the first time since January 2015. Inventories were broadly flat, remaining in contraction for the fifth consecutive month. Respondents were optimistic orders would increase over the coming three months, with 44% saying they would be higher, compared with 13.5% who thought they would be lower. Panellists, though, were less confident this year as compared with outturns of 55.6% and 8.9% respectively when the same question was asked in March 2015.
The recovery in the oil price had some impact on prices in March, but Prices Paid remained in contraction for the eighth consecutive month. If sustained, the rise in oil prices is likely to put further upward pressure on prices over the coming months.
Chief Economist of MNI Indicators Philip Uglow said, “The most signficant result from the March survey is the pick-up in the Employment component which has remained weak for much of the past year. Looking through some of the recent volatility, the data are consistent with steady, not spectacular, economic growth in the US.“
