ISM Chicago reports Chicago Business Barometer Lowest Since December 2015.

  • The Chicago Business Barometer fell 3.9 points to 43.2 in October, the lowest level since December 2015. The index slipped further into contraction with a second straight sub-50 reading. The survey points to further weakness in business activity, with the three-month average falling further to 46.9.
  • New Orders declined to 37.0, its lowest since March 2009 -- Production bounced up to 46.8, although the indicator has been in contraction since July.
  • Order Backlogs saw the largest monthly decline, dropping by 13.6 points to 33.1. The index registered below the 50-mark for a second successive month after September’s level of 46.8.
  • Inventories rose to 47.1, marking the strongest reading since August, indicating that companies continued to run down their stock, albeit at a slower pace. Employment registered a touch below the 50-mark in October, rising by 4.2 points to 49.8.

Special Questions

  1. October’s special question asked “What impact the latest interest rate cuts by the Federal Reserve have on firm’s business?” The majority (51.1%) expect no impact, while 31.1% state a positive effect.
  2. A second asked “How the government-imposed tariffs will affect their firm’s business?” While 56.5% noted a little negative impact, 26% indicated a major negative effect.

Dark Comedy


Mid-Cycle Correction Idea Challenged

Econoday Blames GM

  • It's often hot or cold for Chicago's PMI sample and October, likely due to the GM strike, was a very cold month, at 43.2 for the headline composite index and a 4-year low. And the leading indicator among the report's details, that is the new order index, is at a 10-year low and a very depressed score of 37.0. Backlogs, which are at a 4-year low and at an even more depressed 33.1, are fairing no better. But outside of orders, weakness is less severe with production at 46.8, inventories at 47.1, and input costs still on the rise at 54.8.
  • Order scores in the 30s are usually seen at times of economic crisis which this sample may be suffering from the GM strike which, however, has been tentatively settled in what might prove to be a major positive for November's report.

Questioning the GM Thesis

Judging from the special questions, Tariffs, not GM, may be the major issue.

Mike "Mish" Shedlock

Chicago PMI in Steep Contraction Plunging to Worst Reading in 4.5 Years

The Chicago PMI went into contraction last month and took a dive to 44.4 in July. Readings below 50 are negative.

US Manufacturing Recession Begins: ISM Contracts First Time in 3 Years

The manufacturing ISM dipped below the 50 mark signaling contraction. New orders, production, and employment are down.

ISM-Markit Manufacturing Divergence Widens Again

The divergence between the ISM Report on Business and the Markit PMI manufacturing index widened this month. ISM increased slightly from 54.8 to 54.9 while the Markit reading declined slightly to an 8-month low of 52.7 from 52.8

ISM and Markit PMI On Verge of Contraction: Expect Contraction Next Month

The closely watched ISM and Markit PMI both hover near 50. That is the dividing line between growth and contraction.

Trump Blames GM for "Stupidly" Causing Ventilator Shortage

Trump went off the deep end accusing GM of not making ventilators to alleviate a shortage in the US.

Bond Yields Crash On ISM Report, More China Tariffs: Inversions Strengthen

The long end of the yield curve continued its post-FOMC decline on poor manufacturing reports and new Trump tariffs.

Tale of Two Indexes: Non-Manufacturing ISM vs Markit PMI

The ISM Non-Manufacturing Index strengthened in October. Markit's Service PMI weakened.

Industrial Production Rebounds after GM Strike Ends

With GM back in swing, Industrial production rose 1.1% after two dismal months.

CPI Up 0.1 Percent: How Much is the CPI Understated?

The BLS says the CPI is up 0.1% for the month and 2.1% from a year ago. What's the real story?