The U.S. manufacturing sector is facing a harsh winter, with the Chicago PMI unexpectedly plummeting to near the lows seen during the COVID-19 lockdown period
The Chicago PMI for December in the United States is 36.9, significantly below the expected 43, and the previous value for November was 40.2. Given the dismal Chicago PMI data, the upcoming ISM Manufacturing PMI to be released later this week may also be poor. The unexpected sharp decline in the Chicago PMI has led to an expanded intraday increase in U.S. Treasury prices, while U.S. stock declines have also widened at one point
On Monday, MNI's Chicago Purchasing Managers' Index (PMI) showed a significant decline in December, approaching the lows seen during the COVID-19 lockdowns, indicating a severe contraction in the manufacturing sector in the Chicago area.
The Chicago PMI for December was 36.9, far below the expected 43, and down from the previous month's value of 40.2. Among the economists surveyed by the media, the most pessimistic expectation was still 40. A reading of 50 is the dividing line between expansion and contraction.
The specific sub-indicators performed as follows:
The pace of increase in payment prices has slowed but remains in expansion. The pace of decline in new orders has accelerated and is in contraction. The pace of decline in employment has slowed but is still in contraction. The pace of decline in inventory has accelerated and is in contraction. The pace of increase in the supplier delivery index has accelerated and is in expansion. The pace of decline in production has accelerated and is in contraction. The pace of decline in order backlogs has slowed and is in contraction.
Regarding the latest Chicago PMI data, analysts stated that this downward trend indicates that manufacturing businesses in the Chicago area continue to struggle, possibly due to market volatility or other external economic pressures.
The Chicago PMI helps to forecast the ISM Manufacturing PMI to be released this week, which is a key indicator of the health of the U.S. manufacturing sector. Given the dismal Chicago PMI data, the ISM Manufacturing PMI may also be poor.
Financial blog Zerohedge pointed out that the Chicago PMI survey shows a sharp drop in sentiment, which aligns with the overall decline in "soft data" since Trump's election. However, this stands in stark contrast to the significant rise in confidence among small and large business CEOs since Trump's election, which is puzzling.
The unexpected sharp decline in the U.S. Chicago PMI led to an expansion in the intraday gains of U.S. Treasury prices, while the intraday losses in U.S. stocks also widened:
The yield on the 10-year U.S. Treasury fell by 7.5 basis points, refreshing the intraday low to below 4.55%. The yield on the 2-year U.S. Treasury fell by 6.6 basis points, refreshing the intraday low to below 4.26%