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Key Points – February Report
The Chicago Business BarometerTM, produced with MNI, fell 4.3 points to 59.5 in February. The downtick comes after a sharp increase in the previous month, when the index rose to a 2.5-year high.
Among the main five indicators, New Orders saw the largest monthly decline, followed by Production. Employment recorded the biggest gain.
Demand eased markedly in February with New Orders dropping 11 points, its lowest level since August 2020. Similarly, Production shed 9.3 points, following two consecutive months of gains. Anecdotal evidence provides a mixed picture, with some firms experiencing a downturn due to the pandemic, while others report strong consumer demand.
Order Backlogs edged higher for the fourth successive month to the highest level since October 2017.
Inventories declined 4.6 points in February but remained in expansion territory with firms stating that logistical issues require an increase in stocks.
Employment rose 5.7 points to a sixteen-month high. The index has been in contraction territory since July 2019, despite the demand for blue collar workers.
Supplier Deliveries inched up 1.6 points, its highest level since May and recorded the third highest reading since the start of the pandemic.
Prices paid at the factory gate edged marginally higher, up 0.1 points, reaching the highest level since September 2018. Companies again noted price increases for raw materials, especially tin.
This month’s special question asked, “How did you cope with disruption this past year?” The majority, at 41.7%, increased their safety stocks, while 22.9% of respondents either implemented new technology or diversified suppliers. The second question asked, “Has your organization decided to require your workforce and contingent labor to be vaccinated?” The majority, at 87.2%, was undecided when asked.
