Chicago Business Barometer Pulls Back Less Than Expected In July

After reporting a substantial rebound in Chicago-area business activity in the previous month, MNI Indicators released a report on Friday showing a modest pullback by its Chicago Business Barometer in the month of July.

The report said the Chicago business barometer edged down to 55.8 in July after surging up to 56.8 in June. A reading above 50 still indicates growth in Chicago-area business activity.

Economists had expected the business barometer to dip to a reading of 54.0 after jumping to its highest level in over a year in the previous month.

The pullback by the barometer was partly due to a slowdown in new orders growth, as the new orders index fell by 3.9 points to 59.3 in July.

MNI Indicators said smaller declines were shown by the production and order backlogs indexes, which offset a strong increase by the employment component.

After three months in contraction, the employment index jumped solidly back above 50 to its highest level since March.

"Demand and output softened somewhat in July following a solid showing in June but still outperformed the very weak results seen earlier in the year," said Lorena Castellanos, senior economist at MNI Indicators.

She added, "On the upside, it was the first time since January 2015 that all five Barometer components were above 50."

The report also said inflationary pressures were little changed, with the prices paid index falling slightly for the third consecutive month.

MNI Indicators also asked Chicago businesses about the potential impact of Britain's vote to leave the European Union, with 66 percent saying they expect the impact of the Brexit to be "negligible".