Economic Descent: The Chicago PMI Collapse Of 2023

Remember in November when Chicago PMI unexpected exploded higher, back above 50 to its highest since May 2022, prompting an array of self-reinforcing, goal-seeked "see, we told you so, the economy is awesome" narratives?

Well all that is now out the window as December's Chicago PMI plunged back to earth - from 55.8 to 46.9 (back into contraction) and well below the expected level of 50...

That is the biggest MoM puke in Chicago PMI since April 2020 - the peak of the COVID lockdowns.

Under the hood, everything was a mess...

• New orders fell and the direction reversed; signaling contraction

• Employment fell and the direction reversed; signaling contraction

• Inventories fell and the direction reversed; signaling contraction

• Supplier deliveries rose at a slower pace; signaling expansion

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• Production rose at a slower pace; signaling expansion

• Order backlogs fell at a faster pace; signaling contraction

Only 1 component rose in December - and that is not good news.

• Prices paid rose at a faster pace; signaling expansion

2023 ended with 'hard' data unchanged - no 'real' economic progress. 'Soft' survey data has risen (as stocks soared) in the last two months, but recently (and confirmed by Chicago PMI), 'soft' data has started to crumble back to reality...