Chicago PMI dips in September

Economic activity in the Chicago area deteriorated more than expected in September, according to figures released on Monday.

The MNI Chicago business barometer fell to 47.1 from 50.4 in August, missing expectations for a reading of 50.0 and moving into contraction territory.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, said the six-point jump in the Chicago PMI in August always looked suspicious.

"We aren’t surprised to see this correction," he said. "The index tends to run a few points below the national ISM index, and the September reading is consistent with a modest increase in the ISM to about 50, from 49.1 in August.

"Looking ahead, under normal circumstances the rebound in China’s Caixin PMI would point clearly to a rebound in the Chicago PMI and ISM surveys, but the trade war has forced a substantial wedge between the state of China’s manufacturing business and that of its US equivalent. We would be surprised to see substantial further downside in the U.S. numbers, but a recovery does not seem to be in the cards yet, given the absence of any meaningful progress towards a trade deal, and the widening of the tariff net."