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The numbers: The Chicago Business Barometer sank in February to an 18-month 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 is sharply lower compared to last summer.
The business barometer is produced by the ISM-Chicago with MNI. It is released to subscribers three minutes before its release to the public at 9:45 am Eastern.
Big picture: Businesses are starting to bounce back after the now-fading omicron wave inflected fresh damage. Yet they are still struggling to hire workers and obtain enough supplies to keep producing sufficent goods and services to meet high customers demand.
These shortages have driven U.S. inflation to a 40-year high.
While there are some signs these problems are easing, they are 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.
