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posted on 31 May 2017

May 2017 Chicago Purchasing Managers Barometer At Lowest Level Since January

The Chicago Business Barometerdeclined but remains in expansion. This survey came in below 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 56.0 to 60.0 (consensus 57.5) versus the actual at 55.2. A number below 50 indicates contraction. Shaily Mittal, senior economist at MNI Indicators stated,

May's fall in the MNI Chicago Business Barometer needs to be viewed in the context of the strength seen in the past three months. With the three-month average, broadly stable, it provides a better guide this month to the underlying activity. Still, business activity over the past three months is running significantly above the levels seen during the same time last year.

From ISM Chicago:

The MNI Chicago Business Barometer decreased to 55.2 in May from 58.3 in April, the lowest level since January.

Optimism among firms about business conditions eased for the first time in four months. Three of the five Barometer components led May's decline, with Order Backlogs and Supplier Deliveries increasing.

After rising for three consecutive months, demand lost ground in May. New orders fell by a hefty 9.6 points, to hit the lowest level since January. In line with lower orders, Production also receded, although by a softer margin. The indicator was down 3.8 points to 55.7 from 59.5 in April. Order Backlogs remained in contractionary territory for the sixth consecutive month, though did rise by 4.8 points in May. Suppliers took longer to deliver key inputs, with the respective indicator 4.3 points higher at 60.3 in May, the highest level since September 2014. There were reports of longer delivery times due to suppliers running out of products because of maintaining low inventories.

The Employment indicator remained broadly stable after leaping out of contraction territory last month. Although the indicator has expanded only eight times in last 24 months, it is showing tentative signs of a pick-up, sitting above 50 in two of the last three months. Panelists reported a rise in temporary hires and a fall in executive level positions to manage costs.

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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