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posted on 28 February 2017

February 2017 Chicago Purchasing Managers Barometer At One Year High

The Chicago Business Barometer which recently has spent more time in contraction than expansion, improved and remained in expansion. This survey came in well above expectations.

Analyst Opinion of Chicago PMI

The results of this survey continue to agree with 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 50.0 to 54.0 (consensus 52.9) versus the actual at 57.4. A number below 50 indicates contraction. Shaily Mittal, senior economist at MNI Indicators stated,

The sharp bounce back in optimism to a level not seen in over two years and growth in output at the highest level for over a year offers an upbeat picture of the US economy. The latest survey shows a continuance of price increases, with Prices Paid at the highest level since September 2014. With inflationary pressures on the rise and the job market having improved, the next rate hike could come soon, possibly in the coming quarter.

From ISM Chicago:

The MNI Chicago Business Barometer rose by 7.1 points to 57.4 in February from 50.3 in January, the highest reading since January 2015.

Following a slow start to the year, firms have become more optimistic this month. February's gain was the largest monthly increase since January 2016 when the barometer rose by 12.5 points. This month's increase was led by four of the five components of the Barometer, with only Supplier Deliveries receding.

The acceleration in demand contributed the most to the Barometer's rise. New orders rose by 10.1 points, moving into expansion territory again, after slipping briefly below 50 in January. Production was up 4.3 points to a 13-month high of 60.3 in February. Order Backlogs rose for the second consecutive month, but remained below the breakeven level, where it has sat for three consecutive months. Employment moved into expansion for the first time in four months hitting the highest level since October 2014. Supplier Deliveries fell to the lowest level since last October.

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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