By Dave Sebastian

The Chicago Business Barometer rose in July as demand was strong but firms remained concerned about supply-chain disruptions and rising prices.

The barometer, also known as the Chicago Purchasing Manager Index, rose to 73.4 this month, both a two-month high and the second-highest pandemic-era reading. Economists polled by The Wall Street Journal were expecting a reading of 64.1.

When the barometer is above 50, it means there is expansion. The reading takes into account five components: new orders, order backlogs, production, supplier deliveries indicators and employment.

Production rose 8.8 points, posting the biggest gain in July, as some firms benefited from supply-chain issues, MNI Indicators said in a release.

Order backlogs reached a two-month high after advancing 3.4 points, according to the release. Companies noted a shortage of raw materials and warehouse personnel, MNI Indicators added. Demand for labor rose 3.4 points during the month as staff availability remained subdued, it said.

Inventories rose 5.1 points, though it has been in contraction since April, according to MNI Indicators.

MNI Indicators said supplier deliveries stayed at June's level in July. Delivery delays remained a problem, it said.

Prices paid at the factory gate fell 0.3 points but remained at a historically high level, MNI Indicators said. The firm said survey respondents noted higher prices for materials and freight as an ongoing concern.

MNI Indicators also asked those surveyed about their planned business activity growth forecast for the second half of the year. About 49% of respondents said they expect growth of 5% to 10%.

In response to a question on whether current inflationary pressures are seen as transitory, 37.2% of respondents said they were unsure, the firm said.

Write to Dave Sebastian at dave.sebastian@wsj.com

(END) Dow Jones Newswires

07-30-21 1020ET