Chicago PMI Indicates Solid Growth

The Chicago PMI ends two months of rout with a 1.6 point rise in May to 54.2, a level indicating solid growth in composite activity. Yet details of the report are uneven. New orders did move back above 50 to indicate growth for the first time in three months, yet backlog orders fell back into contraction and are the worst performing element of the report. Low backlogs will not spur hiring which is at its lowest rate since October 2017. Production picked up in May and inventories moved back above 50. This report is part of a developing picture of economic moderation, though nothing severe enough to increase calls for a Federal Reserve rate cut.