The Chicago Business Barometer fell 1.8 points in March to a seasonally adjusted 62.2, the 30th consecutive month of expansion but back down to the level of December, a month followed by a further decline in January to 60.2. The composite index enjoyed its fifth month above 60 in March and its three month moving average remained at 62.1 for a second month, still its highest level since May 2011.
The report was highlighted by a New Orders Index that declined 5.9 points after a sizable February increase, an Inventories Index which rose 7.8 points – its biggest increase since December 2010 after five months of slowing. And the Prices Paid Index rose 4.5 points to 70.1, its largest gain in 15 months and to the highest level since August.
The Employment Index dropped 7.9 points to 56.3, yet not entirely retracing its February increase of 9.5 points which had taken the index to its highest level since May 1984 (65.0) when the national unemploy-ment rate was 7.4%.
The Production Index rose 0.8 of a point to 68.6, its level highest since April 2011’s 69.7. Order Backlogs went up 0.7 to 54.3. The Supplier Deliveries Index was essentially stable, up 0.1 point to 57.8.
Among the Buying Policy indices, Production Materiel lead time in March lengthened again, going to 45.2 days, adding to its January high for the series which began in June 1997. February had shown a slight contraction. The lead time for Capital Equipment purchases lengthened to 118.2 days in March, a third consecutive month of lengthening and its highest level since August 2011.
Given the combination of decreased New Orders, accompanied by higher Inventories and Prices Paid, the March MNI Chicago Report, while expanding, raised a cautionary note that the pace of business activity may have slowed slighty before producers fully adjusted.