The Chicago Business Barometer which recently has spent more time in contraction than expansion barely remained in expansion. This survey came in below expectations.
From Bloomberg, the market expected the index between 52.0 to 54.2 (consensus 53.4) versus the actual at 50.4. A number below 50 indicates contraction. Chief Economist of MNI Indicators Philip Uglow said,
This was a disappointing start to the second quarter, with the Barometer barely above the neutral 50 mark in April. Against a backdrop of softer domestic demand and the slowdown abroad, panellists are now more worried about the impact a rate hike might have on business than they were at the same time last year.
The Chicago Business Barometer decreased 3.2 points to 50.4 in April from 53.6 in March led by a fall in New Orders and a sharp drop in Order Backlogs. It marks a slow start to the second quarter, with most measures down from levels seen a year earlier.
Three of the five Barometer components decreased between March and April, with only Production and Supplier Deliveries posting increases on the month. April's decline left the three-month trend running at a softer pace of 50.5, having ended Q1 at the highest level in over a year.
The decline in the Barometer was led by a fall in New Orders, leaving it at the lowest level since December 2015. Order Backlogs, which last month increased to slightly below 50, saw a double-digit decline in April, while Employment moved back into contraction. Production posted a small rise while Supplier Deliveries increased sharply to the highest since October 2014
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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