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HomeNewsEconomyChicago Business Barometer: Midwest Manufacturing Gains “Not Sufficient to Offset” Prior Losses

Chicago Business Barometer: Midwest Manufacturing Gains “Not Sufficient to Offset” Prior Losses


Surveys gauging growth or contraction in Midwest manufacturing. (REUTERS)

The Chicago Business Barometer, the Institute for Supply Management’s gauge of Midwest manufacturing activity, jumped to 55.6 in January. While that’s up from 42.9 the month prior, the survey’s chief economist is cautioning against overly optimistic reactions to the month’s gains in light of the larger trend in the prior quarter.

“While the surge in activity in January marks a positive start to the year, it follows significant weakness in the previous two months, with the latest rise not sufficient to offset the previous falls in output and orders,” Chief Economist of MNI Indicators Philip Uglow said. “Previously, surges of such magnitude have not been maintained so we would expect to see some easing in February.

The gain in the Chicago Business Barometer followed what the report characterized as “extreme weakness in the fourth quarter,” with the index averaging 47.7, the weakest quarterly growth since the third quarter of 2009. The three month trend remained in contraction at 48.7, up only slightly from 47.7 in December.

Wall Street expected a much shallower gain to 45.9. Readings above 50 point to expansion, while those below indicate contraction.

“Still, even if activity does moderate somewhat next month, the latest increase supports the view that GDP will bounce back in Q1 following the expected slowdown in Q4,” Uglow added.

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PPD Business, the economy-reporting arm of People's Pundit Daily, is "making sense of current events." We are a no-holds barred, news reporting pundit of, by, and for the people.

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