Chicago PMI Falls Deeper Into Contraction Territory In December To 42.9By Kitco News
Thursday December 31, 2015 09:56
(Kitco News) -
The headline index for the Chicago Business Barometer, widely known as the Chicago Purchasing Managers Index, fell farther into contraction territory to a reading of 42.9 in December, according to a report released Monday.
The index was down 5.8 points from November’s weak reading of 48.7. Consensus expectations for various news organizations had been for the index to rise back into positive territory in to a reading of 50.4.
The report noted that the mid-west manufacturing sector has struggle to gain momentum this year. December's print is 16.5 points beneath the January high of 59.4; at the same time, the quarterly average declined to 49.3 in the fourth quarter, the same average reported in the second quarter--- the weakest quarter since Q3 2009.
“The steepness of the decline in the Barometer in recent months ends a particularly volatile year, which has seen orders and output move in and out of contraction. It lends weight to the Fed’s gradual approach to tightening, with the flexibility to change direction if needed,” said Philip Uglow, chief economist of MNI Indicators, in the report.
Readings above 50 in such diffusion indexes are seen as a sign of economic growth, and vice-versa. The farther an indicator is above or below 50, the greater or smaller the rate of change. With a reading below 50, the index was back in contraction territory for the sixth time this year, according to the report.
December has not been a positive month for the manufacturing sector, according to some of the regional data, highlighting continued weakness. Earlier this month the Philadelphia Federal Reserve’s manufacturing business outlook survey fell to a reading of negative 5.9, down from November’s reading of 1.9. During the same week the New York Fed’s Empire State manufacturing survey some some improvement but remained in negative territory. The general business conditions index in the manufacturing gauge climbed to a reading of minus 4.6 from minus 10.7 in November.