The
Chicago PMI printed 58.7 in May after falling below 50 (49.0 in April) which is
contraction territory. This is well above the consensus forecast of 50.0.
The improvement was broad based with the production (62.7, previous: 49.9), new
orders (58.1, previous: 53.2), and employment (56.9, previous: 48.7)
sub-indices all posting solid gains. The supplier deliveries index also
returned to positive territory with a print of 52.3 in May after a reading of
47.9 in April. This is an encouraging report after a soft April
number. The index is currently at its highest level since last March,
which stands in contrast to the Empire State and Philly Fed manufacturing
indices, which had negative readings in May. The Chicago PMI is more
closely correlated with the manufacturing ISM than the other regional surveys,
and in conjunction with the modest improvement in the ISM new orders index in
April, the consensus is looking for a reading of 51.5 in the May manufacturing
ISM on Monday.