The Chicago economy is booming, according to the October Chicago Business Barometer report (link opens a pdf) released today by the Institute for Supply Management.
After clocking in at 55.7 for September, October's index soared more than 10 points to 65.9, its highest level since March 2011 and the largest month-to-month increase in more than 30 years. Analysts were pleasantly surprised by the leap, having expected a slight decline from September to a 55.0 reading.
The Institute for Supply Management produces its index from surveys of purchasing and supply chain professionals based in Chicago. An above-50 rating indicates expansion, while below 50 implies a contraction from the previous month. Although the geographic focus is limited to the Chicago area, investors keep tabs on the index as a leading indicator of U.S. economic activity.
According to the report, this month's reading enjoyed double-digit gains from the all-important new orders component, as well as from production and order backlogs. New orders hit a nine-year record, while production reached a two-year high .
Philip Uglow, chief economist for MNI Indicators (an ISM partner), said: "The government might have shut down but Chicago area companies powered ahead in October as orders and production surged. While it is a little surprising to see such a large rise in activity, the consistent increase in the Barometer over the past four months suggests the recovery is gaining traction."
