A reading of Chicago-area economic activity nudged higher in March to cap the strongest quarter in more than two years, a sign of the growing business optimism since the election of President Donald Trump.
The Chicago PMI rose to 57.7 in March from 57.4 in February, on a scale where any reading above 50 indicates improving conditions. The first-quarter average of 55.1 was the best showing since the fourth quarter of 2014, MNI Indicators said.
In March, 4 of the 5 components improved, with only employment falling, into contraction territory.
The first-quarter average for prices paid is the highest since the third quarter of 2011, in a sign of inflationary pressure.
Also read: Inflation reaches Fed target for first time in nearly five years
Trump’s election has stirred business optimism — and stock-market enthusiasm — on hopes for deregulation, tax breaks and infrastructure spending. So far, however, little progress has been made on those fronts, and Congress’s difficulty in passing health reform could signal difficulties on other issues.
The Chicago PMI is the last of the major regional manufacturing gauges before the national Institute for Supply Management manufacturing report is released.
Jim O’Sullivan, who has won MarketWatch’s Forecaster of the Year award for six straight years, says he will likely forecast an ISM reading as high or perhaps higher than February’s 57.7 figure.