The Chicago Purchasing Managers’ Index (Chicago Business Barometer) rose for a third straight month in March, reaching its highest level since November 2023. The index increased to 47.6 from 45.5 in February, surpassing the 45.5forecast. The latest reading marks the 16th consecutive month the index has contracted.
Background on Chicago PMI
The Chicago PMI assesses the business conditions and the economic health of the manufacturing sector in the Chicago region. A value above 50.0 indicates expanding manufacturing activity, while a value below 50.0 indicates contracting manufacturing activity.
Looking at its historical performance, the current level of 47.6 is lower than where the index stood at the start of 5 of the 7 recessions since its inception. This suggests that such weak readings have often preceded broader economic downturns.
A Closer Look Since 2000
Examining data since 2000, the index has undergone fluctuations, often aligning with broader economic cycles. Given its persistent weakness, the current level reinforces concerns about ongoing softness in the manufacturing sector.
Chicago PMI vs. ISM Manufacturing Index
Let's compare the Chicago PMI with the more popular national ISM manufacturing index. Over the 661 months of available data, the Chicago PMI has been higher 69% of the time. However, despite this frequent outperformance, its historical average of 54.4 is only slightly higher than the ISM’s 52.5.
It's clear the two indices tend to move together, however it’s important to note that the ISM Manufacturing Index is reported with a one-month lag.
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