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Highlights:
- The Chicago Business Barometer PMI rose to 46.6 in September, up from 46.1 in August.
- Key improvements were seen in order backlogs and employment, according to ISM.
- The index remains below the 50-point threshold, signaling continued contraction in business activity for the 10th straight month.
Business activity in the Chicago region showed signs of improvement in September, according to the latest Chicago Business Barometer purchasing managers' index (PMI). The index rose to 46.6, up from 46.1 in August, marking the second consecutive monthly increase. Despite this upward movement, the PMI remains below the critical 50-point threshold that separates contraction from growth, marking the 10th straight month in negative territory since November 2023.
The rise in the index surpassed the consensus forecast of 46.2, indicating a better-than-expected improvement in the region’s business conditions. The Institute for Supply Management (ISM) noted that the increase was driven primarily by improvements in two of the five key subcomponents: order backlogs and employment. These gains helped to boost the overall index, signaling some stabilization in certain areas of business operations.
However, the ongoing reductions in supplier deliveries, new orders, and production partly offset the positive contributions from other components, tempering the overall outlook. The Chicago region's business activity remains under pressure as these key factors continue to weigh on the pace of recovery.
While the recent improvements are a positive sign, the Chicago PMI’s continued position below the 50-point mark reflects the broader challenges facing the region’s business environment. Analysts will be closely watching future readings to see if the upward trend can continue and eventually push the index back into growth territory.
The business community remains cautious, awaiting stronger signals of recovery as factors such as supply chain disruptions, weakening demand, and production constraints continue to impact overall performance.
