Chicago PMI hits lowest level in three years

Sept. 28, 2012
Business activity in the Midwest contracts in September, adding to national economic woes

Business activity in the Midwest fell for the first time in three years, according to purchasing managers surveyed for the September Chicago Business Barometer, issued today by the Institute for Supply Management Chicago.

The Chicago PMI, as it is known, registered 49.7 in September, the first time it has dropped below the 50-point threshold indicating growth since September 2009. What’s more, the new orders index fell below 50, order backlogs contracted for the fourth time in five months, prices paid showed the largest gain in nearly two years, and the employment index hit a two-and-a-half year low.

The Chicago PMI had been one of the bright spots in the manufacturing outlook, remaining in growth mode as regional and national indexes have slowed this year. Purchasing managers interviewed for the report cited uncertainty surrounding government policies and the general economy as key reasons for the decline.

The report follows a national decline in manufacturing business activity cited earlier in the month. ISM’s national PMI fell for the third straight month in August, registering 49.6, down 0.2 percentage points compared to July. New orders fell for the third straight month as well, declining nearly 1% to 47, and the production index declined for the first time since May 2009, falling 4% to 47.

Looking ahead, other groups are calling for sluggish growth for the remainder of 2012 and into 2013. The Manufacturers Association for Productivity and Innovation downgraded its industrial outlook in September, calling for 4.5% growth this year—down from 5.2% growth forecast in June—and 2.3% growth in 2013, down from a previously forecast 3.3% growth rate. The group said it doesn’t expect the industrial economy to return to moderate growth until the second half of 2014.

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About the Author

Victoria Fraza Kickham | Distribution Editor

Victoria Kickham is the distribution editor for Electronic Design magazine, SourceESB and, where she covers issues related to the electronics supply chain. Victoria started out as a general assignment reporter for several Boston-area newspapers before joining Industrial Distribution magazine, where she spent 14 years covering industrial markets. She served as ID’s managing editor from 2000 to 2010. Victoria has a bachelor’s degree in English from the University of New Hampshire and a master’s degree in English from Northeastern University.