Chicago PMI Exceeds Expectations in March

Written by David Schollaert

The Chicago Business Barometer showed a much bigger than expected increase in March after falling to an 18-month low the month prior, according to the latest indicators from Market News International (MNI) and the Institute for Supply Management (ISM).

MNI Indicators said the business barometer jumped to 62.9 in March from 56.3 in February and was well ahead of the expected 57.0 measure. A reading above 50 indicates growth.

The bigger-than-expected advance by the business barometer came as all main indicators increased, with the inventories index and the new orders seeing the largest boost. Only prices paid declined in March.

The inventories index surged to a nearly 50-year high of 68.7 in March from 57.3 in February as firms stocked up due to ongoing supply chain disruptions. The employment index also climbed to 48.1 in March from 43.5 in February – last monwth was the lowest since October 2020 – as firms saw employment levels improve. Hiring skilled workers remained challenging, though, keeping the reading below 50, and still indicating a contraction.

The new orders index also shot up to 61.9 in March from 53.0 in February, while the production index rose to 60.0 from 55.4. The prices paid index edged down to a 12-month low of 85.7 in March from 86.5 in February – but remained elevated compared to historical norms 

Order Backlogs inched up 2.5 points to a five-month high of 64.3 in March. Backlogs have remained persistently high due to key material constraints, including chip shortages.

Chicao PMI Fig1

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By David Schollaert,

David Schollaert

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