Econintersect: The Chicago Purchasing Managers Index rose 7.1 points, remains in expansion territory, and more than reverses last month’s decline.
The Chicago Business Barometer increased to 63.0 in April from 55.9 in March, the fastest pace of growth for six months, led by sharp rises in New Orders and Production.
The market was expecting a value of 54.0 to 60.0 (consensus 56.9) versus the reported value of 63.0. A number below 50 indicates contraction.
April’s gain, the second strongest outturn in two and a half years, left the three month trend in the Barometer just below the 60 level, consistent with continued recovery of the US economy.
New Orders and Production increased sharply, while improvements in Order Backlogs and Employment also added to the month’s strong performance.
Employment rebounded, nearly offsetting March’s decline. Recent volatility in Employment reflects the ebb and flow of demand, with many companies employing a highly contingent workforce.
Supplier Deliveries was the only component of the Barometer to expand at a slower pace in April. Faster delivery times were partially due to better weather conditions.
Inventory of finished goods contracted at a slower pace and stood close to neutral. Prices Paid eased for the third consecutive month and remained at their lowest level for a year.
Commenting on the MNI Chicago Report, Philip Uglow, Chief Economist at MNI Indicators said, “Last month’s downturn appears to have been a blip with the Barometer increasing sharply in April to the highest since October 2013. Looking at both March and April in aggregate leaves the pace of growth steady at around the 60 mark, which chimes with continued growth in the US economy. It’s a good start to the second quarter, and the increases in New Orders and Production lend support to growing views that US GDP growth is set to accelerate.â€
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.
