Chicago PMI hits best level since 1973

Economic activity in the Chicago area unexpectedly improved in May, according to data released on Friday.

The MNI Chicago business barometer rose to 75.2 from 72.1 the month before, hitting its highest level since November 1973 and beating expectations for a reading of 68.0.

MNI said demand provided a boost to business activity, but supply chain constraints remain.

Among the main five indicators, new orders and order backlogs saw the biggest gains, while employment recorded the only drop.

The new orders index jumped to its highest level since December 1983, rising 7.7 points in May, while the production index dipped by 2.3 points.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, said: "This startling reading - the highest since November 1973 - appears inconsistent with the message from other regional surveys and China’s Caixin PMI, which tends to lead the US surveys.

"To be clear, all these surveys are strong, but they are off their peaks. The Chicago PMI, however, is uniquely sensitive to movements in orders for Boeing airciraft, which have risen sharply in recent months. Accordingly, we think this jump is a Chicago-specific story and we doubt that it signals a rebound in the national ISM next week."