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 points indicate an expanding business environment, while readings below 50 indicate a contractionary environment.
In September, the Chicago PMI declined by 2.1 points to a level of 64.7. This is the second consecutive decline for the index, which dropped by 6.6 points in August. The figure came in just below market expectations, which hovered at 45 points. However, the index remains firmly in expansion territory as it is still above 50 points.
Economic activity in the Chicago continued to moderate for the second consecutive month, although the overall business environment remains expansionary. Order backlogs eased last month, with the corresponding sub-index dropping by 20.5 points, albeit to a still elevated 61.1. However, supplier deliveries were also slower last month. Firms continue to be impacted by supply chain bottlenecks, and this is unlikely to change in the near future. Prices continue to be an issue for most respondents to the survey, although the labor shortage appears to be improving. Firms are expecting higher labor costs in the next few months, up to 5% higher, only adding to the existing inflationary pressures.