Chicago PMI Roller Coaster Continues

It's another rough ride with the Chicago PMI, accelerating sharply to 55.6 in January after hitting the brakes in December at 42.9. New orders are at their best level since January last year while backlogs, though still contracting, posted substantial improvement. Production is also at its highest in a year. Negatives include another contraction for employment, which however still improved in January, and another contraction for prices paid that reflects commodity price weakness. A plus in the report is a decline in inventories to a 1-year low, destocking that points to future restocking in what is a plus for the production and employment outlook. This report, which covers the whole of the Chicago-area economy, offers an upbeat early assessment of economic activity this month.

Recent History Of This Indicator:
The Chicago PMI is expected to indicate a third month of contraction for the area's economy in January though, at an Econoday consensus of 45.5, less contraction than December's unusually low 42.9. Order readings have been especially weak in this report, one that tracks the whole scope of the Chicago area's economy. Note that volatility is not unusual for this report.