Some good news for the manufacturing sector: the latest reading on business activity in the Midwest was much better than expected.
The Chicago purchasing manager’s index for January was 55.6. Economists had estimated that it was 45.3.
The prior reading was 42.9, and as Reuters’ Jamie McGeever noted, the month-on-month rebound was the biggest in nearly 50 years.
The PMI was in contractionary territory — below 50 — for most of 2015.
In January, the new orders component of the barometer jumped to the highest level in a year, while production also surged.
Chief economist at MNI Indicators Philip Uglow said in the release:
“While the surge in activity in January marks a positive start to the year, it follows significant weakness in the previous two months, with the latest rise not sufficient to offset the previous falls in output and orders. Previously, surges of such magnitude have not been maintained so we would expect to see some easing in February.
Still, even if activity does moderate somewhat next month, the latest increase supports the view that GDP will bounce back in Q1 following the expected slowdown in Q4.”
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