Chicago Purchasers

November 30th, 2015 11:28 am | by John Jansen |

Via Millan Mulraine at TDSecurities:

TD SECURITIES DATAFLASH                   

US:  Chicago PMI Falls Back Below Zero

·         The Chicago PMI drifted back into contractionary territory in November, falling to 48.7 from 56.2.

·         This was a far weaker performance than the market consensus for a more modest decline to 54.0, marking the 6th month this year that this indicator has fallen below 50.

·         The overall tone of this report was weak, as the key forward looking indicators continue to linger in contractionary territory.

The Chicago PMI disappointed expectation, with the headline index falling to 48.7 in November from 56.2. This was a far weaker performance than the market consensus for a more modest decline to 54.0. The decline marks the 6th month this year that this indictor has fallen below 50. On an ISM weighted basis the index slipped to 49.3, after holding above the 50 mark for four consecutive months. The details of the report were equally weak, with a number of key forward-looking indicators such as new orders (at 44.1), order backlog (at 46.6) and the new orders to inventory spread (at -4.2) all pointing to continued weakness ahead.

The overall tone of this report was weak, and the sub-50 print on this indicator aligns it with the other regional manufacturing indicators that have been lingering in contractionary territory. Admittedly, this is a very volatile series and it continues to meander above and below the 50 break-even mark. So far this year it has had 6 sub-50 prints and 5 above-50 prints. The Chicago PMI has been a relatively unreliable predictor of the ISM manufacturing sector performance, however, we see some downside risks to the market forecast for a 50.5 print tomorrow. TD’s forecast is 49.7.

Be Sociable, Share!

Post a Comment