The latest Chicago Purchasing Manager's Index (Chicago Business Barometer) fell to its lowest level in 7 months in December. The index dropped to 36.9 from 40.2 in November, marking the third consecutive decline. The latest reading was worse than the 42.7 forecast and keeps the index in contraction territory for a thirteenth straight month.
Background on Chicago PMI
The Chicago PMI assesses the business conditions and the economic health of the manufacturing sector in the Chicago region. A value above 50.0 indicates expanding manufacturing activity, while a value below 50.0 indicates contracting manufacturing activity.
Let's take a look at the Chicago PMI since it began. The current level of 36.9 is below the level the index was at for the start of 6 of the 7 recessions that have occurred since its inception.
Here's a closer look at the indicator since 2000.
Chicago PMI vs. ISM Manufacturing Index
Let's compare the Chicago PMI with the more popular national ISM manufacturing index. Out of the 660 monthly data points, the Chicago PMI has been higher 70% of the time. Despite that overwhelming majority, the Chicago PMI's historical average of 54.4 is only slightly higher than the ISM's of 52.5. It is clear that both indices follow one another. Note the ISM Manufacturing indicator is through the previous month.
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