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posted on 31 October 2016

October 2016 Chicago Purchasing Managers Barometer Slips. Barely In Expansion.

The Chicago Business Barometer which recently has spent more time in contraction than expansion, weakened and barely remained in expansion. This survey came in below expectations.

Analyst Opinion of Chicago PMI

The results of this survey continue to be around the middle of the district Federal Reserve manufacturing surveys - some came with some better values and others in contraction.

From Bloomberg, the market expected the index between 53.1 to 55.5 (consensus 54.3) versus the actual at 50.6. A number below 50 indicates contraction. Lorena Castellanos, senior economist at MNI Indicators stated,

A key takeaway from the latest survey was the pick-up in Prices Paid to a nearly two-year high. Inflationary pressures are on the rise, which is one of the metrics the Federal Reserve has been waiting for to increase rates. However, economic growth ahead, as read by the October Chicago Business Barometer, looks very disappointing. Hopefully, it doesn't mark the start of a downward trend.

From ISM Chicago:

The MNI Chicago Business Barometer fell 3.6 points to a five-month low of 50.6 in October from 54.2 in September, suggesting economic activity in the US lost some momentum having picked up in Q3.

The latest outturn marked a weak start to Q4, with the three-month trend softening to 52.1 in October from 53.8 in the three months to September.

The Barometer decline was led by a slowdown in Production, which fell 5.4 points to 54.4, giving up most of the gain seen last month but remaining above the 2016 average. New Orders also subtracted from the Barometer, falling to the lowest level since May. Order Backlogs increased slightly, but failed to jump out of contraction territory, where they have been over the past three months. Employment saw a smaller rise, edging back above the 50-breakeven level and recovering some of the lost ground experienced in the previous month. Meanwhile, Supplier Deliveries fell to the lowest level since June.

z chicago pmi.png

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.

source and read the full report: Chicago PMI



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