By Maria Martinez The growth pace of business activity in the Chicago region remained at robust levels in May, climbing to an almost five-de
By Maria Martinez
The growth pace of business activity in the Chicago region remained at robust levels in May, climbing to an almost five-decade high, data from MNI Indicators showed Friday.
The Chicago Business Barometer was 75.2 in May, reaching its highest level since November 1973, up from 72.1 in April. Economists polled by The Wall Street Journal expected the index to fall to 68.
The barometer is compiled every month after surveying purchasing and supply management professionals in the Chicago area, who are polled to assess business conditions for their respective companies. Readings above 50 point to expansion of business activity in the region, while readings below 50 indicate contraction. The indicator has been in expansion territory uninterruptedly since July 2020.
Among the main five indicators, new orders and order backlogs saw the largest gains, while employment recorded the only decline, the report said.
Demand remained strong in May with new orders jumping to the highest level since December 1983. The index gained 7.7 points in May, while production slowed 2.3 points.
“Anecdotal evidence signals strong consumer demand, partly due to the fear of raw material unavailability,” MNI Indicators said.
Order backlogs jumped 7.5 points, hitting a 70-year high. Firms noted logistical issues and personnel shortages which are driving backlogs, the report said.
Inventories fell to a nine-month low, the second successive reading below the 50-mark.
Employment slipped back into contraction territory in May, following two months of readings above 50. The indicator declined 6.5 points and firms indicated difficulties finding new staff.
Supplier deliveries rose 5.9 points in May with supply-chain constraints remaining a serious problem. Companies continuously noted delivery delays due to transportation issues and material shortages.
Prices paid at the factory gate fell 3.1 points in May, down from April’s 41-year high. However, several respondents said prices for commodities, such as steel, plastics, copper, or electronic components rose further, the report said.
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(END) Dow Jones Newswires
May 28, 2021 10:19 ET (14:19 GMT)
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