Chicago Business Barometer–Drops to 42.9 in January

The Chicago Business BarometerTM, produced with MNI, slipped to 42.9 in January, the lowest level since December 2015. 

After two straight months of gains, the index fell further into contraction, with the three-month average falling to 45.9.All five major components of the headline index saw a monthly decline, with Order Backlogs leading the way lower, followed by New Orders. 

Demand weakened in January, highlighted by New Orders falling 6.1 points to 41.5. Production cooled by 3.8 points to 42.7, the lowest level since July 2019.  

Order Backlogs slipped to a four-year low in January, showing the largest monthly fall in both points and percentage terms, leaving the index 10.1 points lower at 34.6. Since March 2019, the indicator has only recorded one reading above the 50-mark. 

After December’s uptick, Inventories eased by 5.8 points to 40.2, marking the lowest level since May 2016 and the sixth consecutive sub-50 reading. 

Employment remained broadly unchanged with the index decreasing by only 0.2 points to 47.0. Supplier Deliveries edged down to 53.3 in January and it is the only one among the five major components which remains above the 50-mark.
 
Prices at the factory gate ticked down by 2.1 points to 56.1, registering a two-month low.