Chicago economic growth slowed down for March, according to a new Chicago Business Barometer report (link opens a PDF) released today by the Institute for Supply Management (ISM).
After clocking in at 59.8 for February, March's index fell 3.9 points to 55.9. Analysts had expected a slight dip, but their 59.0 estimate proved overly optimistic. This latest report is the lowest level recorded since August 2013.
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, weaker growth for new orders and order backlogs contributed to March's setback. Employment growth is currently at a standstill, a sharp contrast from February's double-digit boost. Production proved a bright spot in this latest report, rising to its strongest level since last November.
For Q1 overall, the Business Barometer averaged 58.4, well below Q4 2013's 63.3 reading. Still, with the ISM's note of an economy "plagued by bad weather," warning signs may be little more than a stormy suspension.
According to Philip Uglow, chief economist for MNI Indicators (an ISM partner), there's still hope ahead: "March saw a significant weakening in activity following a five month spell of firm growth. It's too early to tell, though, if this is the start of a sustained slowdown or just a blip. Panellists, though, were optimistic about the future. Asked about the outlook for demand over the next three months, the majority of businesses said they expected to see a pick-up."