Chicago PMI in Steep Contraction Plunging to Worst Reading in 4.5 Years
Economists expected a rise back into positive territory this month but ISM Chicago notes the Chicago Business Barometer™ Softens to 44.4 in July.
- Four of the five components were in contraction territory this month, with only Supplier Deliveries above 50. The weakness in the Barometer observed in Q2 continued into the current quarter, with the latest outturn making it the weakest start to Q3 since 2009.
- The Production indicator fell 22% on the month to hit a 10-year low. Demand remained muted, highlighted by the New Orders indicator that subsided further into contraction.
- Weaker demand and production led firms to adjust their workforce. The Employment indicator fell into contraction for the first time since October 2017 and hit the lowest level since October 2009.
- Two in five firms expected the economy to see slower growth than currently, with some holding tariffs responsible for the slowdown. The majority, at 46%, did not expect any change while only 14% expected the economy pick up.
No Panic Yet
Don't worry, ISM Chicago says "Firms are not panicking yet, but the latest report isn’t adding to the cheer."
Mike "Mish" Shedlock