The Chicago Purchasing Managers Business Barometer fell sharply in May. The 11.5 point decline to 54.1 was the steepest drop since 1974, nearly matched the record for a one month decline and pulled the index to its lowest since June 2003. Consensus expectations had been for a more moderate drop to 62.0.

During the last ten years there has been a 65% correlation between the level of Chicago PMI and the three month change in factory sector industrial production.

New orders and production posted the sharpest declines of the component series and the employment index fell to the lowest level since January. During the last ten years there has been a 75% correlation between the level of the employment index and the three month change in factory sector employment.

The index of prices paid fell again to the lowest level since September 2003. During the last ten years there has been an 86% correlation between the Chicago price index and the three month change in the "core" intermediate goods PPI.