Chicago PMI, a gauge of manufacturing in the Midwest, surged to 65.9 in October, from 55.7.
This is the highest level since March 2011, and the biggest monthly increase in over 30 years.
This crushed expectations for 55.
The report pointed out that the government shutdown didn’t really impact businesses.
“The government might have shut down but Chicago area companies powered ahead in October as orders and production surged,” said Philip Uglow, Chief Economist at MNI Indicators.
This along with the Fed’s failure to ackowledge the troubles in Washington suggests the Fed could be closer to tapering its $US85 billion monthly asset purchase program.
A reading below 50 indicates contraction.
“The October Chicago Business Barometer rose to 65.9 in October from 55.7 in September, led by double digit gains in New Orders, Production and Order Backlogs. October’s gain placed the Barometer at the highest level since March 2011 with companies seemingly unaffected by the government shutdown.
October’s advance in the Barometer was its biggest monthly increase in over 30 years and only the third time in the past decade the Barometer has risen for four consecutive months.
Chicago area business expanded at a surprisingly steep pace with some panelists reporting brisk activity linked to inventory replenishment, increased customer demand, success with new product lines and new distribution channels.
New Orders soared to their highest level in nine years, adding to two prior months of gains while Production expanded to its highest level since February 2011.
Order Backlogs leapt out of a contractionary phase to the highest since March 2011. In line with expansion in New Orders and Production, Employment rose to its highest since June 2013, but remained well below the level of New Orders and Production.
Inventories continued to contract, though at a slower pace, while Prices Paid and Supplier Delivery times declined marginally.
Commenting on the MNI Chicago Report, Philip Uglow, Chief Economist at MNI Indicators said, “The government might have shut down but Chicago area companies powered ahead in October as orders and production surged.”
“While it is a little surprising to see such a large rise in activity, the consistent increase in the Barometer over the past four months suggests the recovery is gaining traction.”
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