Having wavered around the magical '50' level for much of the last year, bouncing off December plunge lows, Chicago PMI printed below expectations of 50.5 at a contractionary 49.3 - the 6th month of contraction in the last 12 months. With weakness in new orders (lowest since Dec 2015) and production (both back into contraction), MNI notes that on the heels of April's decline, the latest results show activity stumbling in the second quarter, following only moderate growth in Q1.
The 8th month of contraction in th elast 14..
As MNI reports, barring a solid revival in June, Q2 could be the weakest outturn since the fourth quarter of 2015 as the April-May Barometer average stood at just 49.9.
Stocks of finished goods fell deeper into contraction to the lowest since November 2009, and the seventh consecutive month in contraction. While a rebuilding over the coming months could support output, the underlying message appears to be that businesses are not confident about the outlook for growth, which makes some averse to stock building.
This lack of confidence was underlined by the answer to this month's special question which showed that 68.7% of panellists did not plan to increase business investment over the next six months.
The persistence of weak business conditions was blamed partly on efforts to keep businesses lean headed into the November US Presidential election. Others cited slowing in China and India and a reluctance to build inventories. Moreover, a mismatch between sales and operational planning was reported at some companies.
Charts: Bloomberg