US Chicago PMI drops to lowest since August 2009
A widely-followed gauge of factory activity in the US Mid-West for December surprised sharply to the downside on Thursday, but some economists cautioned clients not to read too much into the figures.
Market News International's Chicago purchasing managers' index dropped from a reading of 48.7 in November to 42.9 - its lowest since August 2009.
That was well below the median market forecast for a print of 50.0.
For both the headline PMI as well as the different subindices the 50.0-point level marks the threshhold between contraction and expansion, with subsequently lower or higher readings denoting increasingly rates of contraction or expansion.
A large fall in the sub-index tracking new orders from 44.1 to 38.8 was the main culprit behind the weak reading in the headline PMI.
Firms' output also registered a turn for the worse, with a sub-index tracking that retreating from 50.9 to 46.7.
"The Chicago PMI, formerly a reliable leading indicator of the national ISM indices, has experienced heightened volatility this year. While the negative reading in December suggests a sizable decline in Chicago-area activity, we do not see this morning’s print as necessarily reflecting broader national trends.
"Nonetheless, most indicators of manufacturing activity have weakened in recent months, and we look for stagnant US manufacturing activity next year as the lagged effects of a much stronger dollar continue to weigh on the sector", said Barclays's Rob Martin in a research note sent to clients.