Economy
Chicago PMI Tanks, Some Components Back to 2009 Levels
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The Institute for Supply Management (ISM) has released the Chicago Purchasing Managers Index (PMI) for the month of December, 2015. It was a negative report and is a picture of good times ending much faster than expected, right as the Federal Reserve has started to hike interest rates.
The Chicago Business Barometer was down 5.8 points to 42.9 in December, which was shown to be the lowest outturn since July of 2009. An issue to consider here is that negative trends point forward rather than just being a backward-dated view of the economy. And to show just how bad this was against the 48.7 reading from November: Bloomberg’s Econoday estimate for December was 50.0, and the lowest estimate was 48.0.
Order backlogs led the decline, registering a 17.2-point drop to 29.4 in December. This does not bode well for the coming months of orders which had been built up. In fact, the PMI showed that backlogs have been in decline for 11 straight months and now stand at the lowest level since May of 2009. Here is how the report worded this:
The double digit move in Backlogs is a rare occurrence and the depth of the decline has only been surpassed by a 17.4 drop in March 1951.
New orders signaled ongoing weakness with contraction at a faster pace. That level was also the lowest since May of 2009. The fall in production was more moderate but still back in contraction, and even the employment component fell back into the red and under 50.
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