The April MNI Chicago Report shows that the Chicago Business Barometer fell 6 points to 56.2, seasonally adjusted, the 31st consecutive month of expansion but dipping to its lowest level in 29 months. April’s report saw some major setbacks within a generally consistent pattern of further slowing.
The report’s most significant drop was the 11.5 point deceleration in Production, the biggest decline in that category in 11 months. New Orders dropped 5.9 points to 57.4, having fallen 5.9 points in the previous month. Order Backlogs went up for the third month, gaining 2.5 points to 56.8.
Inventories fell 3.5 points, after a rise in March more than twice as large, making six months of shrinkage of the past seven. The Prices Paid Index backed off a point and a half but only to 68.6.
The Employment Index increased 2.4 points to 58.7, still well below February’s 64.2, which was the highest since May 1984. Supplier deliveries were off 2.2 points to 55.6.
Among the Buying Policy indices, Production Materiel lead time in April shortened by a major amount, 16.3 days, to 28.9, the first month of the last four not in the 40-point range. That index answers the question, “How far in advance must you buy, to have when needed.” The lead time for Capital Equipment purchase lead times shortened to 111.3 days, down 6.9 points to a one-year low.
A second month of decline in the Barometer, pulled down by such a big fallback in Production and a sizable setback for New Orders, brings it just 6.2 points above the break-even mark and suggests more caution in the face of continued erosion of demand, even with an increase in Order Backlogs.