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Highlights
Purchasers in the Chicago area are reporting red hot conditions in December. Their business barometer index jumped more than six points to 68.6. Details show major acceleration in new orders, to a 73.6 level which isn't likely to be exceeded in future reports, at least exceeded by much. In other words, incoming business is as good as it gets in the Chicago area.
Production, at 74.0, is keeping up with new orders while employment, at 60.2 for a nearly four point gain, is expanding sharply. Inventories are building, deliveries are slowing and input prices are rising -- all indications of strength.
A pivotal sign of strength is a big build for backlog orders which also increased in the Philadelphia and Richmond Fed reports. Rising backlogs point to the need to increase output, increase capacity and hopefully increase employment. The Chicago sample includes purchasers from both the manufacturing and non-manufacturing sectors, and today's report points to robust strength in next week's national purchaser reports from the ISM.
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Market Consensus before announcement
The Chicago PMI strengthened in November to 62.5 from 60.6 the prior month. The composite has come in above 60 for three months in a row. Production, at 71.3, is humming and is raising demand for employment which is at 56.3 compared to October's also strong 54.6. Looking ahead, December's composite should be healthy as the new orders index in November rose to 67.2 from 65.0 the prior month.
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