Chicago manufacturing PMI jumps in June

Manufacturing activity around the Great Lakes area in the US picked-up significantly in June, according to one of the most widely-followed gauges for factory activity in that area of the country.

The MNI Chicago Business Barometer registered a rise of 7.5 points from 49.3 in May to 56.8, hitting its highest mark since January 2015, on the back of strong gains in new orders and production.

Economists had been expecting a print of 50.7.

June´s recovery in the index offset the weakness seen over the previous two months and left the indicator broadly unchanged for the second quarter, with an average reaading for those three months of 52.2 versus the 52.3 evidenced in the first quarter.

Production registered a significant jump, hitting its best mark since January, alongside sharp gains for sub-indices linked to new orders and order backlogs.

Output recovered to the level seen in January 2016.

Despite the above, firms shed workers at their quickest pace since November 2009, MNI said.

Chief Economist of MNI Indicators Philip Uglow commented, “June’s sharp increase in the MNI Chicago Business Barometer needs to be viewed in the context of the weakness seen in April and May. Looking at the three-month average provides a better guide this month to the underlying trend in the economy with activity broadly unchanged between Q1 and Q2.

"Still, on a trend basis activity over the past four months is running above the very low levels seen around the turn of the year.”

Jesse Hurwitz at Barclays chipped in: "despite this apparent strengthening in activity, the employment index dipped to the lowest level since 2009 in this morning’s report. This type of divergence is not unprecedented in the survey, but is clearly not commonplace. We expect tomorrow’s ISM manufacturing report will clarify the national state of the manufacturing sector at the end of Q2."