The Chicago "Business Barometer" fell sharply, to 51.6 for June, according to an Institute for Supply Management and MNI report (link opens as PDF) released today. After hitting a 14-month high of 58.7 in May, June's report clocks in 7.1 points lower, at 51.6, its largest drop in over four years. Analysts had expected only a slight decrease to 55.
The Chicago Business Barometer is based on a survey of purchasing and supply-chain professionals, and is closely watched by analysts as a possible leading signal of economy growth. A barometer reading above 50 indicates growth, while below 50 denotes contraction.
"Activity dropped back in June following the large rise in May," said MNI Chief Economist Philip Uglow in a statement. "The trend level of the Barometer has picked up since the fourth quarter of 2012, and while these latest data point to some weakening between the first and second quarter, it is too early to say if this will continue."
The metric is made up of five separate components. Employment posted the only gains, while order backlogs fell to their lowest level since September 2009. Although new orders fell from their 58.1 May reading, June's 54.6 level could still signal solid growth ahead.
