The numbers: The Chicago Business Barometer fell in February for the first time in three months to a one-and-a-half-year low of 56.3, as companies struggled with a shortage of labor and materials and the tail end of the omicron wave.
The decline in February was worse than expected. Economists polled by the Wall Street Journal had forecast the index to drop to 63.4 from 65.2 in January.
Readings over 50 signal expansion, but the index was sharply lower compared to last summer.
New orders and production both decined in February and employment fell to the lowest level since October 2020.
One bit of good news: The prices that companies paid for supplies slid to an 11-month low. Prices — and inflation — are still high, but some businesses said they were leveling off.
The business barometer was produced by the ISM-Chicago with MNI. It was released to subscribers three minutes before its release to the public at 9:45 am Eastern.
Big picture: Businesses were starting to bounce back after the now-fading omicron wave inflected fresh damage. Yet they were still struggling to hire workers and obtain enough supplies to keep producing sufficient goods and services to meet high customers demand.
These shortages have driven U.S. inflation to a 40-year high.
While there were some signs these problems are easing, they were still severe and continue to shackle an otherwise strong economic recovery.
Market reaction: The Dow Jones Industrial Average
DJIA,
and S&P 500
SPX,
fell sharply in Monday trades amid heightened tensions in Europe over the Russian invasion of Ukraine. Severe sanctions on Russia could hurt the region’s economy.
