The Chicago Business Barometer eased for a second consecutive month in April. The 3.6-point slip to 49.2 for the month represents a fall back into contractionary territory, according to the latest report from Market News International (MNI) and the Institute for Supply Management (ISM).
Factors driving the overall monthly decline were order backlogs (contracted 11.4 points), new orders (down 6.5 points), supplier deliveries (down 3.7 points), and production (decreased by 1.3 points). Prices paid climbed to the highest level since June 2025, gaining 5.4 points. The key rivers for increased prices cited by respondents were oil, metals, and transportation fuel surcharges. A 7.9-point gain in employment factors tempered the declines.
A majority of survey respondents (55%) stated that if a geopolitical conflict persists, raw material and commodity costs will be most affected. Thirty-five percent said transport and delivery costs will be most affected. The remaining 10% cited energy for production as the factor most likely to experience the largest cost impact.
One question asked how businesses were responding to the unexpected increases in input costs. Just under half of respondents (42%) are passing through a portion of the cost and absorbing some themselves. Many (26%) stated they passed most or all costs via surcharges and fees. Sixteen percent said they are absorbing the costs and cutting their margins, and 13% are still evaluating what to do. The remaining 3% of businesses have cut operational costs to offset price increases.
The survey found 45% of respondents are still evaluating how to handle sourcing amidst tariff uncertainty. Almost a third (32%) of respondents said they expect to maintain domestic sources exclusively in the next six to 12 months. While 29% plan to continue using international suppliers, six percent will increase their use of domestic suppliers, and 3% are going to increase their use of international suppliers. Another 3% still aren’t sure what they will do.
Each month, an online survey of manufacturing and non-manufacturing firms in the Chicago area captures business data. The latest survey ran from April 1-14.
