Chicago PMI: Highest Level Since 1988

This morning's report of the Chicago PMI for January was not only ahead of expectations (68.8 vs. 65.0), but it also came in at the highest level in over twenty years.  While the headline number was strong, some of the sub-components were even stronger.  For example, Employment (64.1) was at its highest level since May 1984, while New Orders (75.7) haven't been this high since December 1983.

In the charts below we highlight the Chicago PMI headline index as well as its employment component going back to 1967.  Each chart shows a similar story of a sharp rebound, followed by a pause (last Summer's weakness) and a new leg higher.  With the employment component surging to multi-decade highs, bulls will no doubt anticipate strength in Friday's employment report.