Chicago PMI beats expectations, Fed's Clarida recommends patience
Staff Writer |
Economic activity in the Chicago area improved much more than expected in February amid a surge in new orders, according to figures released on Thursday.
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The MNI Chicago business barometer index rose to 64.7 this month from 56.7 in January, beating expectations for a reading of 57.5. This marked the highest level for the index since December 2017.
Four out of five of the barometer's sub-components rose, with only supplier deliveries receding.
New orders rose by 15.2 points, the largest monthly increase since January 2016, when it jumped 17.4 points. Meanwhile, the sub-index for production was up 8.5 points to a fresh six-month high.
The component for order backlogs was up 5.6 points, offsetting January's decline. Meanwhile, supplier delivery times continued to subside this month, marking the fourth consecutive decline and hitting the lowest level since June 2017.
The US central bank's second-highest ranking official reiterated the case for patience in judging the Federal Reserve's next moves on interest rates, while highlighting that inflation expectations were near the lower bound of the range which he believed was consistent with policymakers' mandate to pursue stable prices.
In remarks prepared for a speech at the National Association for Business Economics, in Washington D.C., Fed vicechairman, Richard Clarida, said: "I believe we can be patient and allow the data to flow in as we determine what future adjustments to the target range for the federal funds rate may be appropriate."
According to Clarida, policymakers had also decided on the strategy that they would pursue for "concluding" the drawdown of their balance sheet.
"Global policy uncertainty remains elevated and financial conditions have been volatile, making efforts to extract signal from noise more challenging.
"Monetary policy at this juncture needs to be especially data dependent." ■