Business activity in the Chicago-area saw a notable slowdown in the pace of growth in August, according to a report released by the Institute for Supply Management - Chicago on Tuesday, although activity still expanded for the eleventh consecutive month.
The ISM - Chicago said its Chicago Business Barometer fell to 56.7 in August from 62.3 in July, with a reading above 50 indicating continued growth in business activity. Economists had been expecting the barometer to slip to a reading of 57.0.
Slowdowns in the pace of production and new orders growth contributed to the slower pace of activity growth. The production index fell to 57.6 in August from 65.0 in July, while the new orders index dropped to 55.0 from 64.6 in the previous month.
The report also showed that the inventories index fell to 46.5 in August from 50.8 in July, with the drop below 50 indicating a contraction in inventories.
Meanwhile, the employment report showed a more modest decrease, edging down to 55.5 in August from 56.6 in July, although the dip still reflected a slowdown in the pace of employment growth.
With regard to inflation, the ISM - Chicago said that the prices paid index fell to 57.2 in August from 58.1 in the previous month.
"After July's surprisingly strong report, the August results provide a less buoyant perspective of U.S. economic activity," the ISM - Chicago said.
"The progress of recovery from the Great Recession continues to be bounded between fears and hopes," the ISM - Chicago added. "The August report suggests the economy remains, barely, on the recovery side of the center line."
Wednesday morning, the Institute for Supply Management is due to release its national report on manufacturing activity in the month of August. The index of activity in the manufacturing sector is expected to slip to a reading of 52.9 in August from 55.5 in July.
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