Chicago PMI registers smaller-than-expected increase for June
The recovery in factory sector activity in the Chicago area lagged behind the rest of the country in June and hiring continued to falter.
Market News International's Chicago Purchasing Managers' Index rose from a reading of 32.3 for May to 36.0 in June.
Economists had forecast an improvement to 42.0.
Furthermore, across the second quarter as a whole the PMI was down by 11.8 points at 34.8, its worst reading since the first three months of 2009, MNI pointed out.
A sub-index tracking companies' output registered the largest increase, jumping by 10.1 points, and another linked to order backlogs was reportedly up by 5 points.
The sub-index for employment on the other hand dropped by 5.1 points, remaining below the 50-point breakeven level for a 12th month in a row.
Not surprisingly perhaps, MNI said firms were still reporting delays tied to the Covid-19 pandemic with many companies noting the "elevated" costs for air freight from China.
Commenting on reading for the latest Chicago PMI and its possible implications, Ian Shepherdson at Pantheon Macroeconomics said: "The very modest uptick in the Chicago PMI is surprising and disappointing; it leaves the index trailing some way behind other regional surveys.
"We assume this is due to the dire state of Boeing, which is based in Chicago. The company has had far more cancellations this year than new orders, thanks both to the ongoing problems with the 737MAX and the collapse in the global airline business. The Chicago PMI is not always a reliable guide to the national ISM manufacturing survey, due tomorrow, so we’re sticking to our forecast that the ISM will be reported rising to 50, from 43.1."