The Chicago Business BarometerTM, produced with MNI, jumped to 75.2 in May, the highest level since November 1973. Demand provided a boost to business activity, but supply chain constraints remain.
Among the main five indicators, New Orders and Order Backlogs saw the largest gains, while Employment recorded the only decline.
Demand remained strong in May with New Orders jumping to the highest level since December 1983. The index gained 7.7 points in May, while Production slowed 2.3 points. Anecdotal evidence signals strong consumer demand, partly due to the fear of raw material unavailability.
Order Backlogs jumped 7.5 points, hitting a 70-year high. Firms noted logistical issues and personnel shortages which are driving backlogs.
Inventories dropped to a 9-month low, the second successive reading below the 50-mark. May saw Employment slip back into contraction territory, following two months of readings above 50.
The indicator declined 6.5 points and firms indicated difficulties finding new staff.
Supplier Deliveries rose 5.9 points to a 47-year high in May with supply chain constraints remaining a serious problem. Companies continuously noted delivery delays due to transportation issues and material shortages.
Prices paid at the factory gate fell 3.1 points in May, down from April’s 41-year high. However, several respondents said prices for commodities, such as steel, plastics, copper, or electronic components rose further.
This month’s special question asked, “Considering the global shortage of computer chips, do you have contingency plans?” While the majority of 46.2% do not use the product, 28.2% have no plans in place. The second question asked about tensions due to the increase in global logistics and component shortages, with the majority is looking to mitigate the risks.
