The Chicago economy is growing at its fastest pace in six monthsaccording to a new April Chicago Business Barometer report (link opens a PDF) released today by the Institute for Supply Management (ISM).
After clocking in at 55.9 for March, April's index jumped up 7.1 points to 63.0. Analysts were pleasantly surprised, having expected a significantly smaller uptick to 56.9 for April.
The ISM creates 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 growth is due primarily to increases in new orders and production. Order backlogs also improved, and the index's employment component regained nearly all of its March loss.
According to Chief Economist for MNI Indicators (an ISM partner) Philip Uglow, "Last month's downturn appears to have been a blip with the Barometer increasing sharply in April to the highest since October 2013. Looking at both March and April in aggregate leaves the pace of growth steady at around the 60 mark, which chimes with continued growth in the U.S. economy."
Uglow called this latest report a "good start to the second quarter," and believes the strong growth in new orders and production should play out as accelerated GDP growth in the months to come.
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