Chicago PMI declines less than expected in July

The Chicago Purchasing Managers’ index edged down to 55.8 from 56.8 in June, but was ahead of consensus estimates for a reading of 54.0.

Meanwhile, the barometer’s three-month average, which provides a better picture of the underlying trend in economic activity, rose to 54.0 from 52.2 in the second quarter – the highest since February 2015.

New orders fell 3.9 points to 59.3 in July, while order backlogs managed to remain above 50 mark that separates contraction from expansion following a 16-month run of sub-50 readings.

Lorena Castellanos, senior economist at MNI Indicators, said: “Demand and output softened somewhat in July following a solid showing in June but still outperformed the very weak results seen earlier in the year. On the upside, it was the first time since January 2015 that all five barometer components were above 50. Looking at the three-month average, the Chicago Business Barometer so far suggests economic activity running at a healthier pace in Q3.

“Another positive came from the Employment Indicator. Although it’s still relatively weak, should July’s increase hold then it could be read as a tentative sign of growing business confidence about economic growth ahead.”