Chicago PMI rises more than expected in February
Economic activity in the Chicago area improved more than expected in February.
The Chicago Purchasing Managers' index rose to 57.4 from 50.3 the month before, beating expectations for a reading of 53.0 and marking the highest level since January 2015.
The improvement was led by four of the five components of the barometer, with only supplier deliveries receding in February.
New orders rose by 10.1 points, moving into expansion territory after dropping briefly below 50 in January. Meanwhile, production was up 4.3 points to a 13-month high of 60.3.
Order backlogs rose for the second month in row but were still below the break-even level, while employment moved into expansion for the first time in four months, hitting the highest level since October 2014.
Shaily Mittal, senior economist at MNI Indicators, said: “The sharp bounce back in optimism to a level not seen in over two years and growth in output at the highest level for over a year offers an upbeat picture of the US economy.
“The latest survey shows a continuance of price increases, with prices paid at the highest level since September 2014. With inflationary pressures on the rise and the job market having improved, the next rate hike could come soon, possibly in the coming quarter."
Pantheon Macroeconomics said: "The Chicago PMI looked very weak relative to other surveys last month, so this rebound goes some way to bringing it back into line. The Chicago index is greatly influenced by the ebb and flow of orders received by Boeing, which is based in the city.
"Our reading of the data suggest the PMI can rise a bit further and will then correct. The outsized influence of Boeing means
that the Chicago PMI is likely to weaken relative to the national ISM survey this year, because Boeing orders are trending down; the global airplane order cycle has peaked. More immediately, though, we reckon the regional surveys collectively are consistent with an ISM reading of about 57 tomorrow, a bit above the consensus, 56.2, and January's 56.0."