Chicago PMI Preview

The Institute for Supply Management (ISM) will release the Chicago Purchasing Managers Index (PMI) today at 9:45 ET. Expectations are for the Index to head back to a slight expansion at 50.6, according to Bloomberg. Consensus estimates range from 48.5 to 55. The Chicago PMI (ISM-Chicago Business Barometer) measures the performance of the manufacturing and non-manufacturing sector in the Chicago region. The Index is computed from five weighted raw indexes: Production (0.25), New Orders (0.35), Order Backlog (0.15), Employment (0.10), and Supplier Deliveries (0.15) and then seasonally adjusted to support month-to-month comparisons. A reading above 50 indicates an expansion; below 50 represents a contraction; while 50 indicates no change. The Chicago PMI is a regional view of the national economy and is considered to be a leading indicator. The Chicago PMI fell back into contraction in May, dropping 6.1 points to 46.2 in May from a 52.3 reading in April. with production and employment down more than 10%. According to the ISM, the low reading in May cast doubt on the strength of the widely expected bounceback in the US economy in the second quarter. This month's reading could indicate whether economic growth is back on track.