Chicago Business Barometer Rises for Third Month

The Chicago Business Barometer, produced in collaboration with MNI, rose by 2.1 points to 47.6 in March, marking the third straight monthly increase and the highest reading since November 2023.

Despite the upward trend, the index has now remained in contraction territory for 16 consecutive months, continuing to reflect underlying softness in the region’s business conditions.

Production Drives Gains, Inventories Fall

The overall improvement in March was primarily fueled by a sharp rebound in Production, which surged 8.8 points, its strongest performance since December 2023, and moved into expansion territory for the first time since June 2024.

Other components of the index showed smaller improvements:

New Orders increased by 0.4 points, reaching a level last seen in November 2023.
Employment ticked up by 0.9 points, continuing its recovery from January 2025, when it hit the lowest level since June 2020.
Order Backlogs rose by 0.7 points, remaining at their highest level since September 2024.

However, some areas saw notable declines:

Supplier Deliveries fell by 2.0 points, suggesting faster turnaround times.
Inventories dropped sharply by 6.5 points, reaching their lowest level since March 2020, possibly indicating caution among firms or improved inventory management.

Prices Remain Elevated

The Prices Paid index edged down 0.4 points, though it still held at the second-highest level since August 2022. Notably, no respondents reported price decreases for the second month in a row, highlighting persistent cost pressures across the supply chain.

Momentum Builds but Recovery Remains Fragile

Although the Chicago Business Barometer has risen for the third month in a row, it is still below 50, which means business conditions are still shrinking. The increases in production and employment are positive signs, but falling inventories and slower supplier deliveries, along with high prices, show that the region’s economy is still facing challenges.

Source: Institute for Supply Management

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