The numbers: The Chicago PMI jumped to 66.2 in October from 65.2 in the prior month, on a scale where any reading over 50 indicates improving conditions. This is the highest level in six-and-a-half years. Economists has expected a decline to 62.
What happened: Three of the 5 components improved in October. Both demand and output climbed for the third straight month. The reading for order backlogs reached a level not seen in over 43 years. However, the employment index slipped below 50 into contraction territory. Inflation pressures softened in the month. “Firms kicked off the fourth quarter in a bouyant mood with only 12% expecting activity to decline between now and the close of the year,” said Jamie Satchi, economist at MNI Indicators.
Big picture: The Chicago PMI is the last of the major regional manufacturing gauges before the national Institute for Supply Management manufacturing report is released. The general theme in the regional surveys in October has been continued strength, said Lou Crandall, chief economist at Wrightson ICAP. Before the Chicago PMI, economists surveyed by Marketwatch expect the IMF factory index to slip to a still-solid 59.5% in October from 60.8 in September.