The Chicago Business Barometer which recently has spent more time in contraction than expansion declined but remans in expansion. This survey came in above expectations.
From Bloomberg, the market expected the index between 52.0 to 57.0 (consensus 54.0) versus the actual at 55.8. A number below 50 indicates contraction. Lorena Castellanos, senior economist at MNI Indicators stated,
Demand and output softened somewhat in July following a solid showing in June but still outperformed the very weak results seen earlier in the year. On the upside, it was the first time since January 2015 that all five Barometer components were above 50. Looking at the three-month average, the Chicago Business Barometer so far suggests economic activity running at a healthier pace in Q3.
Another positive came from the Employment Indicator. Although it’s still relatively weak, should July’s increase hold then it could be read as a tentative sign of growing business confidence about economic growth ahead
The MNI Chicago Business Barometer fell 1 point to 55.8 in July from the 1½-year high of 56.8 in June, led by a fall in New Orders. Smaller declines were seen in Production and Order Backlogs, which offset a strong increase in the Employment component. The Barometer’s three-month average, though, which provides a better picture of the underlying trend in economic activity, rose to 54.0 from 52.2 in Q2, the highest since February 2015. Following strong gains in the previous month, Production, New Orders and Order Backlogs declined somewhat in July, but remained above May’s levels, when they all fell into contraction territory. New Orders fell 3.9 points to 59.3, but held most of June’s gain that had left the indicator at the highest level since October 2014. Order Backlogs, which last month rose to the highest since March 2011, managed to remain above 50 following a 16-month run of sub-50 readings.
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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