Chicago PMI rises more than expected in March

Economic activity in the Chicago area improved more than expected in March, according to data released on Wednesday.

The MNI Chicago business barometer rose to 66.3 from 59.5 in February, hitting the best level since July 2018. Economists had been expecting a reading of 60.7. A reading above 50.0 indicates expansion, while a reading below signals contraction.

Among the main five indicators, production saw the largest gain, while order backlogs saw the biggest decline.

Pantheon Macroeconomics said the jump in the Chicago PMI makes the massive surge in the Philly Fed index look a bit less of an outlier, though it’s not clear how much of the increase represents a real strengthening of the trend and how much represents a post-storm catch-up, or is a reaction to the passage of the massive Covid relief bill.

"Either way, the surveys signal that the manufacturing sector continues to recover strongly. Prices continue to rise too; the Chicago prices paid index rose for a seventh straight month, to its highest level since August 2018," said chief economist Ian Shepherdson.