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Key Points – February Report
The Chicago Business BarometerTM, produced with MNI, fell 8.9 points to 56.3 in February, weakening for the first time since November 2021. New Orders slowed, with almost a quarter of firms surveyed seeing a decline.
- All five of the main five indicators fell, with New Orders and Supplier Deliveries taking the largest hit. Only Inventories edged up over the month.
- In February, Production fell for the second consecutive month, dipping 5.2 points to 55.4, the lowest reading since August 2020. Firms were seeing more orders unfilled due to materiel shortages.
- Employment dropped to 43.5 following January’s recovery, fading 5.6 points, to the lowest since October 2020. Firms stated that vaccine mandates and seasonal factors were causing resignations.
- New Orders slowed to a 20-month low of 53.0, falling 12.3 points.
- Supplier Deliveries eased 12.3 points through February to 75.3, although firms still report suppliers struggling to manage demand and increasing prices.
- Order Backlogs ticked down by 0.1 points to 61.8. Raw material shortages and delays increased lead times.
- Inventories grew following last month’s slowdown, 2.5 points higher at 57.3 and 6.5 points stronger than the 12-month average. Firms continued stocking up due to persistent supply chain disruptions.
- Prices Paid declined 2.5 points to an 11-month low of 86.5 in February. Some firms noted price gouging by suppliers, whilst others saw prices levelling off.
This month we asked firms by what percentage they see employment costs rising this year. Approximately half expect a 4-6% increase, followed by 28% pricing 7- 10% increase. 11% anticipated a marginal increase of 1- 3%, whilst an equal near-6% saw either no increase or an increase over 10%.
