Business conditions improved markedly in the Chicago region in March, according to a closely watched business barometer.
The Chicago purchasing managers index rose to 61.7% from 47.9% in February, the NAPM-Chicago reported Friday.
It was the largest month-to-month gain in the 39-year history of the index. It was the highest reading since April 2005.
Economists were expecting an increase in the Chicago PMI to about 50%, according to a survey conducted by MarketWatch. See Economic Calendar.
Readings over 50% indicate a majority of firms in the region reported improving conditions.
This is good news, although it has definitely taken me by surprise. First -- this is a huge spike. This is not just a few points, but the largest in the reports history. Secondly, this is taking place when overall business investment dropped in the 4th quarter of 2006. That means that business sentiment has really reversed in a big way. Given the overall news we've had over the last few weeks (lower durable goods, big mortgage problems) this number just seems out of whack. I could be wrong on that, but that's just what it seems to me.