June 2019 Chicago Purchasing Managers Barometer Falls Into Contraction

The Chicago Business Barometer decreased by 4.5 points to 49.7 in June from 54.2 in May.

Analyst Opinion of Chicago PMI

The Fed manufacturing surveys were little changed or decreased this month - and Chicago ISM and one other Fed Survey were in contraction.

Expectations this month from Econoday were 53.0 to 54.8 (consensus 54.0) with the actual at 49.7. A number below 50 indicates contraction.

Shaily Mittal, Senior Economist at MNI Indicators said:

The Barometer entered contraction territory, having remained above 50 for over two years. With customers rethinking their purchases, demand tumbled, and consequently firms pulled back production, weakening overall business sentiment. In coming months, our survey will provide further evidence as to whether the diminished business confidence is temporary amid tariffs woes or more structural calling for some counter measures.

From ISM Chicago:

The MNI Chicago Business Barometer decreased by 4.5 points to 49.7 in June from 54.2 in May, marking the first sub-50 reading since January 2017. Business confidence dipped significantly in Q2, with the Barometer averaging 52.2, down 13% on the previous quarter and almost 16% lower than Q2 2018. Demand eased for the fourth time this year, helping push the indicator into the contraction territory for the first time since January 2017. Amid weak demand, firms also slowed production levels. The Production indicator fell 15.5% on the quarter to hit a three-year low. Order Backlogs remained in contraction for the second consecutive month. It was the only indicator that fell below 50 on the quarter as well.

The Chicago ISM is important as it is a window into the national ISM reports which will be issued shortly. When you compare the graph below of the ISM Manufacturing Index against the Chicago PMI (graph above) - there is a general correlation in trends, but not necessarily correlation in values.

Source and read the full report: Chicago PMI