There are no hurricanes in Chicago where the PMI, which has been very strong all year, absolutely surged in September to 65.2 for a 6.7 point gain that puts the index at its highest level in 29 years. Yet when smoothing this often very volatile index out, the average for the third quarter is actually down a tenth from the second quarter at what is a still forminable diffusion score of 61.0.
Readings moved higher but it's a surge in backlog orders, also hitting a 29-year high, that leads September's report. High backlogs point to the need for hiring which has been very weak in this sample but did move back into positive ground in the month. Cost pressures, likely the result of Hurricane Harvey's impact on the energy sector, are another feature of today's report, hitting a 6-year high.
Outside of prices, the report's sample isn't reporting any direct hurricane effects though nearly 40 percent expect delivery times to begin lengthening at least slightly. This report, in contrast to this morning's personal income and spending data, is yet another reminder that private and regional surveys, where sample sizes are small and responses voluntary, have been far outpacing hard economic data at the national level.
Recent History Of This Indicator
The Chicago PMI has been one of the highest flyers of any regional reports this year, posting consistent readings near or over 60. For September, forecasters are calling for 58.5 vs August's 58.9. This report tracks both the non-manufacturing and manufacturing sectors of the Chicago-area economy.