The Chicago Business Barometer, or Chicago PMI as it is more commonly known, surprised economists by dropping 5.7 points to 48.7 in September The decline follows two months of expansion and the speed of descent is a cause for concern said MNI Indicators.
The production index plummeted by double digits to its lowest level since July 2009 pushing the headline PMI into negative territory. New orders dropped significantly and manufacturer backlogs remained in contraction indicating business are working below capacity.
“While activity between Q2 and Q3 actually picked up, the scale of the downturn in September following the recent global financial fallout is concerning,” said MNI Indicators Chief Economist Philip Uglow. “Disinflationary pressures intensified and output was down very sharply. We await the October data to better judge whether this was a knee jerk reaction and there is a bounceback, or whether it represents a more fundamental slowdown.
Of the five components of the barometer, only supplier deliveries and employment remained in expansion in September. Supplier deliveries were unchanged from August. Employment levels rose for the third month in a row but MNI says most survey respondents reported no change in staffing levels.
Prices paid fell to their lowest level since July 2009, impacted by global pressure on crude oil and commodity prices.
The MNI Chicago Business Barometer, a closely watched leading indicator of U.S. economic activity, is published by MNI Indicators and is based on a survey panel of purchasing/supply chain professionals, primarily drawn from membership of the Institute for Supply Management-Chicago (ISM-Chicago). The Chicago Business Barometer is a composite diffusion indicator made up of the Production, New Orders, Order Backlogs, Employment and Supplier Deliveries indicators and is designed to predict future changes in gross domestic product (GDP). An indicator reading above 50 indicates expansion compared with a month earlier while below 50 indicates contraction.
Sandy WilliamsRead more from Sandy Williams
Latest in Economy
AISI explains new PM2.5 air-quality regulation’s impact on steel
The US already had strict regulations on air-quality standards for particulate matter, but they are going to get even tighter.
Architecture Billings Index remains soft in January
The Architecture Billings Index (ABI) reading from the American Institute of Architects (AIA) and Deltek showed a slight uptick in January but continued to signal soft conditions. The index inched up from 45.4 in December to 46.2 in January. While the index has moved higher consecutively each month since October, it remains in contraction territory. […]
Manufacturing remains sluggish in New York state
Manufacturing activity in New York State continued to shrink this month, according to the latest Empire State Manufacturing Survey from the Federal Reserve Bank of New York.
Housing starts drop again in January
US housing starts fell for the second consecutive month in January, according to the most recent data from the US Census Bureau.
Consumer confidence accelerated in January
Consumer confidence in the US rose in January and accelerated to a two-year high, The Conference Board reported. Results came amid slacking inflation and expectations that the Federal Reserve could soon start cutting interest rates. The headline Consumer Confidence Index rose to 114.8 in January from a downwardly revised 108.0 in December. The index, which […]