Chicago PMI suggests further gains in Midwest activity

The Chicago PMI ticked down to 54.4 in August from 54.7 last month, broadly in line with consensus expectations (54.5) and a touch below our forecast (55.0). Production (59.0, previous: 61.8) and new orders (56.7, previous: 58.5) eased a bit from their July readings, but held recent overall gains that represent a swift recovery from Q1 weakness.

The employment index moved up to 49.1 (previous: 46.2), still in contractionary territory but a stronger reading than in the past three months. The survey commentary noted that 63 percent of respondents had no plans to expand payrolls in the next three months.

"Elsewhere, prices paid fell to 47.3 (previous: 54.5), in line with the slump in oil and commodities prices. Overall, the August print suggests Chicago area service sector and manufacturing activity continues to rebound in Q3 from recent softness", says Barclays.