Chicago Business Barometer Drops Much More Than Expected In August

06:11, 31st August 2016

(RTTNews) - Chicago-area business activity grew at a notably slower rate in the month of August, according to a report released by MNI Indicators on Wednesday.

MNI Indicators said its Chicago business barometer dropped to 51.5 in August after edging down to 55.8 in July.

While a reading above 50 still indicates growth in regional business activity, economists had expected the index to show a much more modest dip to 55.2.

The much bigger than expected decrease by the business barometer was led by a large setback in order backlogs and a deceleration in new orders.

The report said the order backlogs index tumbled by 14.5 points to 41.7 in August, moving back into contraction territory and hitting its lowest level since April.

MNI Indicators said the new orders and production indexes also subtracted from the barometer, although both continued to indicate expansion.

On the other hand, the employment index climbed to its highest level since April of 2015, building on July's strong pickup.

The report also said inflationary pressures eased slightly for the fourth straight month, leaving the prices paid index at its lowest level since March.

"Economic activity slowed down into the summer, suggesting June's momentum was only a temporary revival in activity," said Lorena Castellanos, senior economist at MNI Indicators.

"Overall, it wasn't a rosy month, with Employment the only measure that gained traction," she added. "On a trend basis, though, the July-August growth rates paint a slightly better picture - albeit still weak - than that seen earlier in the year."