Auto manufacturing plant and worker in Midwest. (Photo: Reuters)
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. The boom in the Barometer, also known as the Chicago PMI, comes after Midwest Manufacturing activity fell 3.6 points to 50.3 in January “due to seasonal factors” from a previously revised 53.9 in December 2016.
“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 U.S. economy,” said Shaily Mittal, senior economist at MNI Indicators.
President Donald J. Trump made the loss of the U.S. manufacturing base a key campaign issue during the election, which was one of the main reasons he became the first Republican since the 1980s to carry previously blue Rust Belt states. Now, during his first full month in office, the gain was the largest monthly increase since January 2016 when the barometer rose by 12.5 points.
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Four of the five components of the MNI Chicago Business Barometer gained, with only Supplier Deliveries tapering off. Demand fueled optimism about the future was largely responsible for the jump in the overall index.
New orders rose by 10.1 points and climbed back into expansion territory again after falling slightly below 50 briefly 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.
“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,” Ms. Mittal added.
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