Chicago PMI weaker than expected in February

The Chicago Purchasing Managers’ index fell 8 points to 47.6 in February following a sharp increase to 55.6 the previous month.

The data, released by the Institute for Supply Management, missed economists’ expectations for a reading of 53, led by significant declines in production and new orders.

Production completely reversed January’s near 16 point gain, pushing back into contraction, while new orders fell sharply and order backlogs slipped further into contraction.

Philip Uglow, chief economist of MNI Indicators, said: “If one looks beyond the gyrations seen over the past three months then trend activity has been running a little below the 50 neutral mark, highlighting continued sluggish activity levels, with manufacturers under particular pressure.

"Still, given the weakness in Q4, it looks like activity should pick up during Q1.”

Ian Shepherdson, chief economist at Pantheon Macroeconomics, said: “The Chicago index has been wildly volatile in recent months, and it could easily rebound strongly in March. In the meantime, note that it is not a reliable indicator of the national ISM, which we still think is likely to be reported up a bit in February when the data appear tomorrow. Manufacturing is struggling, but we doubt the sector is still weakening.”