Econintersect: The Chicago Purchasing Managers Index improved slightly for the third month in a row after June’s largest drop in almost five years.
Led by gains in Production, New Orders and Supplier Deliveries, the Chicago Business BarometerTM gained 2.7 points in September to 55.7. The Barometer has gained in each of the past three months, the longest run of monthly increases for more than three years. Activity has recovered from April’s three year low of 49.0, although is still only consistent with modest economic growth.
The market was expecting a value of 52.0 to 53.7 versus the reported value of 55.7. A number below 50 indicates contraction.
Gains in September Production levels, while healthy, followed a three month slide. New Orders were up for the second consecutive month to the highest level since February. Supplier Deliveries lengthened in September to their highest level since March.
Order Backlogs rose marginally from August, but remained below the breakeven 50 level for the fourth month in a row. Employment softened for the third consecutive month and was the only barometer component to fall in September. Inventories continued to contract and Prices Paid fell substantially after rising in the past four months.
Commenting on the MNI Chicago Report, Philip Uglow, Chief Economist at MNI Indicators said, “Activity picked-up again in September close to trend supported by New Orders and Production. While the pick-up is welcomed, growth is far from solid. The easing in the employment component is a notable setback this month, underlying the fragility of the recovery.”
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