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Chicago Business Barometer Unexpectedly Indicates Contraction In September

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Chicago-area business activity unexpectedly contracted in the month of September, according to a report released by MNI Indicators on Friday.

MNI Indicators said its Chicago business barometer slumped to 45.7 in September from 52.2 in August, with a reading below 50 indicating contraction. Economists had expected the business barometer to edge down to 51.8.

With the much bigger than expected decrease, the Chicago business barometer entered contraction territory for the first time since June 2020.

The notable pullback by the headline index came as the production, new orders, order backlogs, employment and supplier deliveries indicators all fell to summer 2020 lows.

The production index tumbled to 44.5 in September from 54.9 in August, as continued supply-chain issues alongside slowing new orders contributed to lower production.

The new orders index also slid to 42.2 in September from 48.9 in August, while the order backlogs index plunged to 41.9 from 54.5.

MNI Indicators noted the employment index saw the starkest decline, diving to 40.2 in September from 54.6 in August.

The supplier deliveries index also slipped to a two-year low of 59.8 in August from 62.1 in August, as deliveries remained unstable and lead times long.

Meanwhile, the report also showed the prices paid index slumped to 74.1 in September from 81.8 in August, hitting the lowest level since November 2020.

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