Economy

A Downer for April's Chicago PMI

Written by David Schollaert

May 1, 2022

The Chicago Business Barometer stumbled in April after exceeding expectations the month prior, according to the latest indicators from Market News International (MNI) and the Institute for Supply Management (ISM). The measure, also known as the Chicago PMI, has seen some extreme fluctuation in the early going of 2022. April’s decrease comes after the index saw a sharp rebound in March after falling to an 18-month low in February.

MNI Indicators suggest factory activity in the Chicago area fell more quickly than expected in April as new order growth nearly stalled. The business barometer dipped to 56.4 in April from 62.9 in March and was below consensus forecast of 60.1. A reading above 50 indicates growth.

The higher-than-expected decline by the business barometer came as all the main subindices fell save for one tracking the prices paid by firms, which edged up by 0.4 points to 86.1.

Survey respondents said the war in Ukraine was inflating prices for steel, plastics, and lumber.

The key sub-index for new orders registered the largest drop, retreating by 10.8 points to 51.1, its lowest level since June 2020. However, another sub-index linked to order backlogs remained at a “persistently high” 63.4.

The inventories index declined for the first time in three months in April, down 4.1 points to 64.6, following a near 50-year high the month prior. The employment index also slipped to 45.5, down 2.6 points month-on-month (MoM). Highly competitive labor market conditions continued to make staff retention challenging, keeping the reading below 50, and still indicating a contraction.

Chicago PMI Apr.22 Fig1

An interactive history Chicago Business Barometer Index is available on our website. If you need assistance logging into or navigating the website, please contact us at info@SteelMarketUpdate.com.

By David Schollaert, David@SteelMarketUpdate.com

David Schollaert

David Schollaert is a senior analyst for Steel Market Update. David joined SMU after more than a decade in the metals and mining industry in a myriad of different roles. Much of his early experience and expertise were within the coverage and analysis of steel-making raw materials and served previously as senior editor of the CRU Prices Service. Most recently, however, before his return to market analysis, David held roles as a metals buyer and an operations manager for raw material suppliers. Based in CRU’s Pittsburgh office, David can be reached at david@steelmarketupdate.com or 724-720-1008.

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