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The Chicago Business BarometerTM, produced with MNI, moderated by -0.8 points to 44.3 in January; the fifth consecutive month below 50. This follows a December rebound to signal a softer downturn.
- Production, Supplier Deliveries and Prices Paid increased over the month in January, with Production recording the strongest growth (albeit remaining below 50). All other subindexes weakened, led by a marked drop in Order Backlogs.
- Production recorded an 8.5-point boost in January to 48.6, remaining marginally contractive. Responses continued to flag a slowing economy and prevailing scepticism filtering into weak production levels, alongside harsh winter conditions.
- New Orders softened by -2.7 points to 40.6, after a 12.3 - point jump in December. Muted demand conditions contributed to the slow start to the year, with over 42% of firms recording fewer orders.
- Order Backlogs descended by -19.2 points in January to a June 2020 low of 35.5, this more than reversed the 17.5 gain in December.
- Employment ticked down by -0.6 points to a four-month low of 42.0 in January as one-quarter of firms reported lower employment levels.
- Supplier Deliveries rose 1.4 points to 54.9 as domestic lead times increased marginally. Certain chemical material shortages remain acute.
- Inventories declined by 4.6 points to 44.9 as firms continued to work down excess inventory built up due to previously severe supply constraints.
- Prices Paid increased in January, accelerating by 7.4 points to 72.5, breaking a five-month streak of loosening prices. Some input prices including steel rose, albeit at a softer pace.
This month’s special question asked “With employment costs increasing and growth outlooks weakening, are you considering slowing hiring in upcoming months?” An equal number of respondents (36.1% each) responded “Yes” and “No”. 11.1% were expecting to somewhat slow hiring, whilst 16.7% remained unsure.
