The greater Chicago economy is still running quite hot. Shown, from the Madison Street Bridge in Chicago’s Loop in 2015, are Gogo, Boeing and Chicago Sun-Times headquarters and the Civic Opera House, among other buildings.
The economy in the Chicago region grew rapidly in July but cooled a bit from earlier in the summer, indicating that businesses are still confident despite political drama in Washington.
The Chicago business barometer, or Chicago PMI, slipped to 58.9 in July from a three-year high of 65.7 in June, MNI Indicators said Monday. The decline broke a string of five straight increases.
Still, any reading over 50 indicates improving conditions.
The Chicago region is a good window into the broader U.S. economy because of its diversified array of firms in the nation’s most important business sectors.
The decline in July “should be viewed in the context of the underlying, upward trend in business sentiment witnessed since early 2016,” said Jamie Satchi, an economist at MNI Indicators. He said the latest reading points “toward robust confidence among U.S. firms.”
The index spiked after President Donald Trump took office in January promising to boost economic growth with a series of pro-business policies. Businesses remain confident in the economy even as much of the president’s agenda, including tax cuts, deregulation and a boost to infrastructure spending, has stalled.
In a separate question, 70% of companies surveyed said they have increased how much they pay workers in the past year.
Also Read: Ignoring Washington chaos, companies likely kept up strong hiring in July
While about four in 10 firms raised pay between 1% and 2%, roughly three in 10 offered raises of 3% to 4%.
Put another way, some companies have had to boost pay to attract or retain workers at a time when the labor market is especially tight. Yet a majority of firms still aren’t increasing wages as much as they normally would when the unemployment rate is near a 16-year low at 4.4%.
The continuing restraints on pay suggest that inflation is unlikely to experience a surge soon, allowing interest rates to remain fairly low for the foreseeable future. That’s likely a good environment for equities, which benefit from lower borrowing costs.
