CHICAGO’S purchasing managers’ index (PMI) reached a 22-year high in February, surprising economists and boding well for today’s US-wide manufacturing results.
The PMI hit 71.2 this month, driven upwards by growth in production and new orders, which reached their highest level – 75.9 – since 1983.
All index scores above 50 indicate economic expansion.
“This strong report indicates continued improvement in the pace of Chicago-area business expansion, and supports our above-consensus forecast of 61.5 for the February ISM manufacturing index,” concluded Nicholas Tenev of Barclays Capital.
The ISM index is released this morning.
There was further good news for the US recovery yesterday, as consumer spending edged up 0.2 per cent in January – the seventh straight month of gains, according to official data from the Commerce Department.
The increase was below the expectations of economists, yet continued to grow following an upwardly revised 0.5 per cent rise in spending in December.
Meanwhile, US incomes jumped by one per cent in January, the largest increase since May 2009, after an upturn of 0.4 per cent in December.
And savings jumped to $677.1bn (£417.5bn) in January, the highest level since August, from $620.9bn in December.
The surge in incomes, well above consensus expectations of a 0.4 per cent rise, reflected the boost from unemployment insurance tax relief, according to Barclays Capital.
“Spending was soft, we expected that after the soft January retail sales report,” added Sean Incremona, an economist at 4Cast in New York.
“Income was surprisingly very strong, there was probably some sort of flattering effects from payroll or tax cuts or some sort of effect from the changeover from the new year,” Incremona said.
The report also showed the Federal Reserve’s preferred measure of consumer inflation -- the personal consumption expenditures price index, excluding food and energy -- edged up 0.1 per cent last month, after being unchanged in December.
However, there was more doom for the ailing US housing market, as contracts for pending sales of previously owned homes fell faster than expected in January to the slowest pace in three months, data from a real estate trade group showed yesterday.