The Chicago Business Barometer plunged a further eight points to 37.2 in November, deepening the downturn in the third consecutive month of contractive business activity. The ISM manufacturing PMI weakened by 0.7 points to 50.2 in October.

• Both indexes are around Q3 2020 pandemic-shock lows, remaining substantially below pre-Ukraine-Russia war levels and the snowball effect of the associated global energy crisis and inflation surge.
• Reweighting the Chicago PMI to the ISM Manufacturing PMI weights exemplifies the strong correlation between the two indicators. Ahead of tomorrow’s ISM release, the Chicago PMI foreshadows a continued downward trend in the US manufacturing industry.
• Markets will be watching for signs of price pressures diminishing due to weaker demand and employment growth showing any weakness.
• The ISM index calculation involves equal weighting of Production, New Orders, Inventories, Employment and Supplier Deliveries. The ISM index has recently remained more elevated than the Chicago PMI largely due to the inclusion of the inventory sub-index, which has been hovering around historic highs due to supply chain crisis-induced over-stocking.

Source: MNI / ISM