Econintersect: The Chicago Business Barometer is expanding in April – up from the contraction in the previous two months. The authors of this index are blaming the contraction earlier this year on the weather and port strikes.
The market expected the index between 45.1 and 52.0 (consensus 50.0) versus the actual at 52.3. A number below 50 indicates contraction. From Bloomberg:
The Chicago PMI posted at a sub-50 March index of 46.3 following 45.8 in February. On a quarterly basis, the index averaged only 50.5 in the first quarter, down steeply from 61.3 in the fourth quarter for the weakest reading since the third quarter of 2009. Respondents are citing bad weather and fallout from the West Coast port slowdown as temporary negatives, and they see orders picking up during the second quarter. Though the Chicago report, which covers both the manufacturing and non-manufacturing sectors, is often volatile, the last two months of sub-50 readings do confirm other indications of first-quarter weakness for the nation’s economy as a whole.
The bounce back in activity at the start of Q2 is consistent with a resumption of normal activity following the poor weather and port strikes earlier in the year. In percentage terms, the April jump is similar to last year, although the level of activity is lower overall.
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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