Chicago Business Index up, But Risks Remain

The Chicago economy continues to improve, according to a new August Chicago Business Barometer report (link opens a PDF) released today by the Institute for Supply Management (ISM). 

After clocking in at 52.3 for July, August's index added on another 0.7 points to hit 53.0 for August, right on the mark for analyst expectations.

The ISM creates its index from surveys of purchasing and supply chain professionals based in Chicago. An above-50 rating indicates expansion, while below 50 implies a contraction from the previous month. Although the geographic focus is limited to the Chicago area, investors keep tabs on the index as a leading indicator of U.S. economic activity.

According to the report, this month's reading notched gains due primarily to upticks in the all-important new orders component, as well as an improvement in contracting order backlogs. However, components for production, employment, and supplier deliveries all recorded slower growth for August.

According to Chief Economist for MNI Indicators (an ISM partner) Philip Uglow, "activity still remains below trend." Although August's report presents another month of evidence for a stabilizing economy, its overall reading remains close to the "break even" 50 level.


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