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Chicago Purchasing Managers Index rose by 7.1 points to 57.4 in February
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The MNI Chicago Business Barometer rose by 7.1 points to 57.4 in February from 50.3 in January, the highest reading since January 2015.
Following a slow start to the year, firms have become more optimistic this month. February’s gain was the largest monthly increase since January 2016 when the barometer rose by 12.5 points. This month’s increase was led by four of the five components of the Barometer, with only Supplier Deliveries receding.
The acceleration in demand contributed the most to the Barometer’s rise. New orders rose by 10.1 points, moving into expansion territory again, after slipping briefly below 50 in January. Production was up 4.3 points to a 13-month high of 60.3 in February. Order Backlogs rose for the second consecutive month, but remained below the breakeven level, where it has sat for three consecutive months. Employment moved into expansion for the first time in four months hitting the highest level since October 2014. Supplier Deliveries fell to the lowest level since last October.
This month’s special question asked firms how the level of oil prices over the past year impacted their businesses. Just over a quarter of respondents said they had been helpful to their business, while 52% of respondents had little or no impact and 22% of respondents found oil prices to have hurt their business. In another special question, firms were asked if they were planning to set goals for adding environmentally sustainable activities in 2017. One in three firms said yes while just over 40% of respondents said no. The remaining quarter said they weren’t sure.
To keep up with demand, companies increased their stock levels at the fastest pace since October 2015, with the Inventories Indicator rising by 15.3 points in February, to climb into expansion territory for the first time in three months.
Inflationary pressures at the factory-gate increased for the third consecutive month. Prices Paid jumped 7.2 points to 68.6 in February, the highest level in just about two and a half years.
“The sharp bounce back in optimism to a level not seen in over two years and growth in output at the highest level for over a year offers an upbeat picture of the US economy,” said Shaily Mittal, senior economist at MNI Indicators.
“The latest survey shows a continuance of price increases, with Prices Paid at the highest level since September 2014. With inflationary pressures on the rise and the job market having improved, the next rate hike could come soon, possibly in the coming quarter”, she added.
Posted: February 28, 2017 Tuesday 09:45 AM