The Chicago Business Barometer significantly improved and now is in expansion. .Last months contraction seems to have been a flash-in-the-pan.
From Bloomberg, the market expected the index between 48.0 to 51.5 (consensus 49.2) versus the actual at 56.2. A number below 50 indicates contraction. Chief Economist of MNI Indicators Philip Uglow said,
The dissapointing September data look more like an aberration than the start of a trend, and the October results mark a good start to the final quarter of the year. Respondents were optimistic that orders will continue to pick-up, consistent with an acceleration in economic activity in Q4.
The Chicago Business Barometer increased 7.5 points to 56.2 in October from 48.7 in September, led by strong gains in both Production and New Orders. The sharp increase in the Barometer pushed it to the highest since January and marks a promising start to the fourth quarter, building on the small gain made in Q3. Production led the latest increase, jumping just under 20 points to 63.4, while New Orders also rose sharply, leaving both at the highest since the start of the year. Firms reported signficant growth in inventories, which accounted for part of the leap in output in October.
The Chicago ISM is important as it is a window into the national ISM reports which will be issued shortly. When you compare the graph below of the ISM Manufacturing Index against the Chicago PMI (graph above) - there is a general correlation in trends, but not necessarily correlation in values.
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