The Chicago Business Barometer which recently has spent more time in contraction than expansion, strongly improved and remained in expansion. This survey came in below well above expectations.
Analyst Opinion of Chicago PMI
The results of this survey continue to be around the middle of the district Federal Reserve manufacturing surveys - and aligns with the overall trend of the ISM manufacturing survey.
From Bloomberg / Econoday, the market expected the index between 50.7 to 54.0 (consensus 52.0) versus the actual at 57.6. A number below 50 indicates contraction. Shaily Mittal, senior economist at MNI Indicators stated,
The November reading for the Business Barometer marked the sixth month of expansionary business activity in the US. Strength in orders, a recovery in oil prices and the stronger dollar have all impacted businesses with varying degrees. Respondents to our survey also remain optimistic about business activity in 2017 although the new government's policies and the Fed's approach towards monetary tightening would impact the course of business activity over the next year.
The MNI Chicago Business Barometer rose 7.0 points to 57.6 in November from 50.6 in October, the highest since January 2015.
The increase added momentum to the fourth quarter, with the three-month trend ascending to 54.1 this month, up from 52.1 in the three months to October.
Four of the five Barometer components increased, with only Employment falling. Although the Barometer has been volatile in recent months, the latest results are positive given that the Barometer was in contractionary territory in the same period last year.
The rise in New Orders contributed the most to the increase in the Barometer, increasing 10.7 points to 63.2 in November. Production also rose, regaining virtually all of October's fall. Order Backlogs jumped out of contractionary territory, where it had been over the past three months, while Supplier Deliveries saw a smaller rise. Despite higher orders and output, demand for labor fell. Employment slipped back into contraction, making last month's recovery short-lived.
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.
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