The Chicago PMI fell sharply to 48.7 in September from 54.4 last month, well below both consensus expectations (53.0) and forecast (53.5). Production (43.6, previous: 59) after having recovered over the summer. New orders (49.5, previous: 56.7) also contracted but remain above their recent lows reached in Q1. Prices paid fell further to 41.5 (previous: 47.3), in line with ongoing weakness in import prices and the low level of commodity prices. In the one bright spot in the survey, the employment index moved back into expansionary territory to 52.3 (previous: 49.1). This report followed on the heels of the ISM Milwaukee manufacturing report, which also came in well below expectations, plunging to 39.4 from 47.7 in August, reaching a post-recession low.
"Recent indicators of manufacturing activity have generally disappointed our expectations. The September print suggests weakness in Chicago area manufacturing activity. Tomorrow, we will receive the broader ISM manufacturing index, which will provide a better gauge of the likely trend in US manufacturing. Our forecast of 50.5 for that series is consistent with stagnant rather than declining activity", says Barclays.
