The February Chicago Business Barometer rose 3.8 points to 64.0 seasonally adjusted, the 29th consecutive month of expansion and the highest level since April 2011. That index enjoyed its fourth month above 60 and its three-month moving average rose 0.5 to 62.1, its highest level since May 2011.
Six of eight Business Activity indices strengthened in February. The report was highlighted by the Employment index which rose 9.5 points to 64.2, the highest it has been since May 1984 (65.0).
There were also notable increases in four other indices, with Production up 4.0 points to 67.8, the highest since April 2011, and New Orders up 5.6 points to 69.2, an 11-month high. Order Backlogs moved up 5.3 points to 53.6 -- moving back into expansion -- and Prices Paid moved up 3.2 points to 65.6.
New Orders once again outpaced growth in Production in February as has been the case in five of the most recent six months, January being the exception.
Inventory expansion slowed for the fifth month, down to 49.6 in February, moving into contraction for the first time since June and is now at its lowest level since August 2010. Supplier Deliveries dropped 3.8 points to 57.7. Supplier Deliveries has risen three of the last six months and has been oscillating since October 2010.
Among the Buying Policy indices, Production Materiel lead time in February dipped after a sharp lengthening in January that had taken it to the longest since the series’ beginning in June 1997. Except for January, the February reading is the highest since October 2010.
The lead time for Capital Equipment purchases lengthened to 117.4 days in February.
The Chicago Report showed widespread, and in some cases exceptionally strong, improvement in February. However, the combination of a slowing in expansion of Supplier Deliveries and a slight contraction in Inventories bears watching.
BUSINESS ACTIVITY: BUYING POLICY:
64.0 Chicago Business Barometer 40.0 Production Materiel
65.6 Prices Paid 11.9 MRO Supplies
69.2 New Orders 117.4 Capital Equipment
57.7 Supplier Deliveries
53.6 Order Backlogs
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