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posted on 31 October 2017

October 2017 Chicago Purchasing Managers Barometer Hits Six-and-a-Half-Year High; Backlogs Highest in 43 Years

The Chicago Business Barometer rose significantly. This survey came in above expectations.

Analyst Opinion of Chicago PMI

The results of this survey continue to correlate to district Federal Reserve manufacturing surveys - and generallly aligns with the overall trend of the ISM manufacturing survey.

From Bloomberg / Econoday, the market expected the index between 58.0 to 65.0 (consensus 62.0) versus the actual at 66.2. A number below 50 indicates contraction. Jamie Satchi, economist at MNI Indicators stated,

Firms kicked off Q4 in buoyant mood with only 12% expecting activity to decline between now and the close of the year. Despite the MNI Chicago Business Barometer hitting a six-and-a-half year high, and output and demand in seemingly rude health, concerns remain over firms' inability to attract and retain skilled workers.

From ISM Chicago:

The MNI Chicago Business Barometer rose to 66.2 in October, up from 65.2 in September, hitting the highest level since March 2011.

After a bullish September showing, firms' optimism regarding the business landscape found further room to grow as they entered the final quarter of the year. Of the five Barometer sub-components, only Employment and Supplier Deliveries slipped from their respective September levels.

Steering the month's result, both demand and output climbed for the third straight month to robust levels. New Orders rose to its highest level since June and the second highest since May 2014 while Production hit its highest level since August 2014. Together, both indicators account for 60% of the Barometer.

Order Backlogs have trended upwards since the start of Q2 and this extended into October. The indicator reached a level not seen in over 43 years, having had set a 29-year high last month. The carryover of backlogs into October, though partially brought on by the disruption caused by the recent storms, when viewed in the context of growing orders paints a picture of healthy demand.

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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