Chicago PMI Continues Rise, Overheating Possible

Overheating is the possible theme from the Chicago PMI which rose a further 1 point in October to 66.2 for the highest score of the expansion. New orders are very strong and continue to fill backlogs which are at a 43-year high, one fed only in part by hurricane disruptions.

The key to the report is employment which contracted, not because employers don't want to hire but because they can't find qualified candidates. And the report notes evidence that firms in the sample are losing their skilled workers to rivals paying higher wages.

The lack of available labor means the Chicago PMI needs to cool before imbalances, including wage-push inflation, begin to appear. This report covers both the manufacturing and non-manufacturing sectors.

Recent History Of This Indicator:
No regional report has been stronger than the Chicago PMI which, at 65.2, hit a 29-year high in September. The sample's backlogs have piled up which points to future gains for hiring. For October, forecasters are unsurprisingly calling for slowing, to a still 60-plus consensus at 62.0.