Chicago PMI ticks lower in February

Economic activity in the Chicago area deteriorated more than expected in February, according to data released on Friday.

The MNI Chicago business barometer fell to 59.5 from January’s two-and-a-half year high of 63.8, missing expectations for a reading of 61.0. A reading above 50.0 indicates expansion, while a level below signals contraction.

Among the main five indicators, new orders saw the largest monthly decline, followed by production, while employment recorded the biggest gain.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, said: "The jump in the index in January always looked unsustainable, and the February correction merely puts the index back into the middle of the range in place since the initial Covid rebound ended in September.

"Like all other manufacturing indicators, the Chicago PMI is at a very high level - despite the disasters at Boeing, based in the city - consistent with solid growth in manufacturing output and employment; it doesn’t need to rise any further.

"The Chicago index is not a reliable month-to-month indicator of the national ISM manufacturing index, but they follow similar trends. We expect the surveys to remain close to their current levels over the next few months, at least."