Chicago PMI is a composite index of business conditions in the Chicago area. Data from Chicagoland firms is collected by the financial news firm, Market News International, through manufacturing and non-manufacturing surveys sent to businesses. A drop in demand for goods is reflected in businesses’ responses in the Chicago PMI survey, which, is in turn, reflected in a lower index reading. Readings above 50 indicate an expanding business environment, while readings below 50 indicate a contractionary environment.
In March, the Chicago PMI surged by 11.4% to a reading of 66.3, the highest since 2018. This month’s reading outperformed the forecasted value of 60.7 by 5.6 points. The index’s forecast has been off by an average of 2.35 points over the last six months. The index has grown by 18.5 points since last March, highlighting the economic recovery that has taken place since the beginning of the pandemic.
Production saw strong gains this month, increasing by 10.1 to a three-year high. On a quarterly basis, production sits at its highest level since the last quarter of 2017. New orders rose by 7.1 points, but the backlog of orders fell by 6 points. Employment in the Chicagoland area shifted into expansion territory for the first time since 2019, with the corresponding index rising by 5.5 points. However, prices surged for the seventh consecutive month, hitting their highest level since mid-2018. This consistent uptick in prices have led to concerns of inflationary pressure building up as a result of a significant expansion of the money supply over the past year. Overall, this month’s Chicago PMI reading indicates that the economy continues to move nominally in the right direction as it recovers from the pandemic-related lockdowns and business restrictions.
March 31, 2021