Chicago PMI hits six-and-a-half year high in October
Economic activity in the Chicago area unexpectedly picked up in October, according to data released on Tuesday.
The MNI Chicago Business Barometer rose to 66.2 from 65.2in September, hitting its highest level since March 2011 and comfortably beating expectations for a drop to 61.0.
Both demand and output rose for the third straight month to robust levels, with new orders at their highest level since June and second-highest since May 2014, while production hit its highest level since August 2014. Together, these indicators account for around 60% of the barometer.
The employment index, meanwhile, slipped below 50 into contraction territory.
MNI Indicators economist Jamie Satchi said: "Firms kicked off Q4 in a buoyant mood with only 12% expecting activity to decline between now and the close of the year. Despite the MNI Chicago Business Barometer hitting a six-and-a-half year high, and output and demand in seemingly rude health, concerns remain over firms’ inability to attract and retain skilled workers."
Pantheon Macroeconomics chief economist Ian Shepherdson said: "The Chicago index is more volatile than the national ISM, but this is nonetheless a startling result. Movements in the index often track swings in orders for Boeing aircraft - their HQ is in Chicago - but this is much stronger than indicated by the orders data. Taking into account other regional surveys, we now reckon that tomorrow's October ISM manufacturing index will be only marginally lower than September's 60.8.
"Either way, the consistent message from all the surveys is that the industrial economy is in rude good health; all we need to see now is the hard data catching up. With the hurricane hit fading, we are optimistic about Q4 manufacturing output."