Chicago PMI climbed to 65.5 in May, the highest level since October.
This beat expectations for a fall to 61 and is up from 63 in April. A reading above 50 indicates expansion.
“The Barometer’s faster expansion was helped by a return to normality following the adverse weather conditions of Q1, with companies playing catch-up to make up for lost output,” according to the press release.
“This was clear from the large spike in Order Backlogs to a three year high, as companies faced a double whammy of strong new demand as well as having to shift existing orders.”
New orders saw a modest increase, but production dipped. Meanwhile, prices paid saw the biggest monthly gain in almost five years.
“We’ve had false dawns before, but the long run of strength in the survey, coupled with other more positive economic data, suggests growth is becoming more entrenched,” said Philip Uglow, chief economist at MNI Indicators.
Ian Shepherdson at Pantheon Macroeconomics wrote that the rise in Chicago PMI, along with the rise in Milwaukee PMI, at its highest level since April 2011, and other regional reports like Philly Fed have been strong in May. This should see the ISM get a slight bump.
Here’s a look at the trajectory of the ISM-Chicago business barometer.
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