“Huge miss for @MNINews Chicago PMI”, exclaimed – checks notes – MNI News, in a tweet marveling at the sheer scope of a miss on their own gauge of regional business activity.
The Chicago PMI isn’t necessarily the most reliable metric and, as you may have noticed last summer, can (and will) abruptly plunge to levels not entirely consistent with other indicators. Those predisposed to running with a bearish narrative were thrilled when the gauge plunged in July. It subsequently rebounded, only to dive again, registering just 43.2 in October, on the way to printing 46.3 the following month, the worst November reading going back 17 years.
Fast forward to January and the gauge registered a dastardly 42.9, an astonishing 6-handle miss to estimates (consensus was 48.9). For months, ISM manufacturing has been the odd man out – but nothing like this.
“[It fell] sharply below expectations to the lowest since 2015”, MNI said, adding that “order backlogs and new orders were particularly weak, with no signs of optimism in production, employment or supplier deliveries”.
This is the worst January read since 2009 and the second worst in 20 years.
The three-month average is now just 45.9. Note that the range of estimates for January from 29 economists was 47 to 50.7. That gives you an idea of just how bad this really is.
No component rose versus last month.
To be clear, nobody is going to care about the details of this assuming there’s anything upbeat to be mined from the release. Markets are concerned about the economy again thanks to the virus scare, and this is just fuel on the fire, especially coming off a third consecutive quarterly drop in business spending tipped in Thursday’s advance read on Q4 GDP.