Chicago PMI Regresses to Six Month Low

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The latest Chicago Purchasing Manager's Index (Chicago Business Barometer) regressed to 40.4 in May from 48.6 in April. This is the ninth straight month in contraction territory. This reading comes in below the forecast of 47.0.

Background on Chicago PMI

The Chicago PMI assess the business conditions and the economic health of the manufacturing sector in the Chicago region. A value above 50.0 indicate expanding manufacturing activity, while a value below 50.0 indicate contracting manufacturing activity.

Let's take a look at the Chicago PMI since it began. The current level of 40.4 is below the level the index was at for the start of six of the seven recessions that have occurred since its inception.

Here's a closer look at the indicator since 2000.

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Chicago PMI vs. ISM Manufacturing Index

Let's compare the Chicago PMI with the more popular national ISM manufacturing index. Out of the 640 monthly data points, the Chicago PMI has been higher 71% of the time. Despite that overwhelming majority, that the Chicago PMI's historical average of 54.7 is only slightly higher than the ISM's of 52.6. It is clear that both indices follow one another. Note the ISM Manufacturing indicator is through the previous month.

This article was originally written by Doug Short. From 2016-2022, it was improved upon and updated by Jill Mislinski. Starting in January 2023, AP Charts pages will be maintained by Jennifer Nash at VettaFi | Advisor Perspectives