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 indicate an expanding business environment, while readings below 50 indicate a contractionary environment.
In July, the Chicago PMI rose by 7.3 points to a reading of 73.4. This is the index’s second highest reading, and it comes after a brief unexpected decline in June. The figure came in 8.9 points above market expectations, making it the widest gap since last September.
Economic activity in the Chicago area picked up again this month, with businesses seemingly trying to produce goods and services as quickly as possible. Orders are rising at a very quick pace, leaving many firms struggling to meet demand. According to the report, some firms have been forced to scale back production or worker hours due to difficulties procuring supplies. As a result of this imbalance between supply and demand, prices have continued to rise rapidly and firms remain concerned about inflation. The same trend has been observed throughout the country over the past several months, not just in the Chicago region. Next week’s manufacturing and services PMIs will reveal whether there continues to be a similar severe imbalance between supply and demand at a national level, which is likely to be the case.
July 30, 2021