The Chicago PMI is a composite index of business conditions in the Chicago area. Data from Chicagoland firms is collected by the financial news firm, Market News International, through manufacturing and non-manufacturing surveys sent to businesses. A drop in demand for goods is reflected in businesses’ responses in the Chicago PMI survey, which, is in turn, reflected in a lower index reading. Readings above 50 points indicate an expanding business environment, while readings below 50 indicate a contractionary environment.
In December, the Chicago PMI rose by 4.9 points to an index level of 44.9. The figure came in above market expectations of 40.0 after a dismal 37.2 reading in November. However, this marks the fourth consecutive month in which the index has remained below the key level of 50, indicating a contractionary environment in the Chicago area.
Economic activity in the Chicago area improved last month relative to the November print (which was the lowest reading since the 2008 financial crisis), although it remained in contraction territory. Prices paid by producers rose at slower pace, which is a welcome signal when inflation—and its impact on the Fed’s monetary policy—remains a top concern for nearly everyone. New orders continued to fall, although also at a slower pace, as did production indicators. Supplier deliveries rose as well. However, employment indicators fell at a somewhat faster pace. It is apparent that the next several months will be challenging for the manufacturing sector. The report seems to indicate that the next ISM Manufacturing PMI release will show contractionary conditions at a nationwide level for the second consecutive month, and matching market expectations.
December 30, 2022