The Chicago Business Barometer significantly declined again and remains in contraction. This survey came in well under expectations.
From Bloomberg, the market expected the index between 48.0 to 53.0 (consensus 50.0) versus the actual at 42.9. A number below 50 indicates contraction. Chief Economist of MNI Indicators Philip Uglow said,
The steepness of the decline in the Barometer in recent months ends a particularly volatile year, which has seen orders and output move in and out of contraction. It lends weight to the Fed’s gradual approach to tightening, with the flexibility to change direction if needed.
The Chicago Business Barometer contracted at the fastest pace since July 2009, falling 5.8 points to 42.9 in December from 48.7 in November. It has been a volatile year for the Barometer. New Orders and Production have experienced particularly large swings with businesses never recovering fully from a sharp plunge at the beginning of the year. The Barometer’s December print is 16.5 points beneath the January high of 59.4. The quarterly average declined to 49.3 in Q4, the same as in Q2 which was the weakest quarter since Q3 2009.
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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