Chicago PMI Continues to Lumber Higher in December

Andrew Klips |

NYSEThe Chicago Purchasing Managers Index, also called the “Business Barometer,” rose from 50.4 in November to 51.6 in December, denoting business activity in the region increasing for the third consecutive month. Any reading above 50 indicates expansion. The index has by “lumbering along since September’s 3 year low,” according to today’s report by the Institute for Supply Management.

Economists were expecting the Chicago PMI to nose upward to 51.0 for December.

New orders climbed to 53.8 from 45.3 the month prior, representing their biggest advance in 19 months, to pace the Business Barometer higher. Although still showing increased activity, production slipped from 54.7 in November to 53.8 in December. Order backlogs contracted for the fifth straight month, dropping 2.7 to 46.9 in December. Employment was a heavy drag on the overall reading with a plunge from 55.2 in November to 45.9 in December, its lowest level in three years. The employment nosedive is reflective of the caution of employers to increase their workforce with the drop-dead date for the fiscal cliff rapidly approaching (t-minus 3 days now).

As typical, select comments from survey panelist that provide perspective on the overall business condition are provided with the ISM report. The anonymous comments generally cover both sides of the spectrum. Of particular note:

“We are on a hiring freeze in Q4, waiting to assess the outcome of the fiscal cliff deliberations. We are also planning cutbacks due to increased healthcare costs and Obamacare related expenses.”

“Business borrowing remains relatively slow. Credit is difficult to obtain or is relatively expensive for all but the most economically healthy borrowers.”

“We have more work than we have people to do build it, nice problem to have, except most of what we have needs to ship before the end of the year, backlog into 2013 is looking strong!”

Overall, the comments for December carried a relatively somber attitude from panelists with concerns about forecasts for the new year, taxes and smaller orders being mentioned.

The Chicago PMI data beat the consensus predictions of economists, much like initial jobless claims did yesterday pending home sales did this morning, but Wall Street largely continues to remain focused on the fiscal cliff. The Dow Jones is heading for it fifth straight losing day, following Thursday’s touching of the lowest level since December 5. Standard & Poor’s 500 Index and the Nasdaq are on the same path for consecutive sessions of closing lower than the prior day.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to:


Emerging Growth

MGX Minerals Inc.

MGX Minerals is a diversified Canadian mining company listed on the Canadian Securities Exchange. MGX is engaged in the acquisition and development of industrial mineral deposits in western Canada that…

Private Markets

Initial State

Initial State is an Internet of Things (IoT) data analytics & data management platform company. We turn sensor and event data into information that matters by making it easy to…

MyForce, Inc.

As parents, we constantly worry about the safety of our loved ones. The media bombards us with incidents from across the nation school shootings, frequent assaults on campuses, and crimes…