LIVE MARKETS-The windy city blows: Chicago PMI logs 19th straight month in contraction

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THE WINDY CITY BLOWS: CHICAGO PMI LOGS 19TH STRAIGHT MONTH IN CONTRACTION

Investors began the Independence Day-shortened week with tidings from the Midwest, where data shows factory activity contracted at a faster-than-expected pace this month.

MNI Indicators' Chicago purchasing managers' index (PMI) USCPMI=ECI budged 0.1 points lower to land at a dismal 40.5, defying the consensus call for a shallower contraction at 43.

The decrease was attributable to declines in supplier deliveries, production, employment and order backlogs. These were nearly entirely offset by an increase in New Orders.

In the PMI universe, 50 is the magic number. A reading greater than 50 indicates expansion, and below that level signifies contraction. A PMI print south of 43 is widely associated with recession.

This marks Chicago PMI's 19th consecutive month in contraction.

When asked "How do you see your business activity growing in the second half of 2025, by percent?" 45% of survey participants said they expect no growth or a decline. Another 45% said they expect growth of 0 to 5%. The balance expected growth of more than 5%.

On Tuesday, the Institute for Supply Management (ISM) is due to unveil its broader, nationwide PMI reading for June, which is seen inching closer to (but remaining shy of) that magic barrier of 50, with an estimated reading of 48.8.

And throwing salt on the wound, analysts expect this Thursday's jobs report to show the manufacturing sector shed 5,000 jobs this month.

Beyond ISM's (and S&P Global's) manufacturing and services PMI releases, plenty of indicators are on tap in the truncated week ahead.

And aside from factory orders, trade balance and construction spending, this week's data is all about the labor market.

The Job Openings and Labor Turnover Survey (JOLTS), a look at labor market churn, is expected on Tuesday, while Challenger Gray's planned layoffs report and ADP's National Employment Index are due to arrive Wednesday.

On Thursday, the main event - the Labor Department's June employment report - is expected to make its entrance.

Economists polled by Reuters predict the U.S. economy added 110,000 jobs this month and see the unemployment rate creeping up to 4.3% from 4.2%.

The report will also provide the first glimpse of June inflation in the form of average hourly wage growth.

Estimates call for wage growth to have cooled on a monthly basis, to 0.3% from 0.4% in May. But year-over-year, wages are seen increasing by 3.9%, a repeat of the prior print.

If this week's jobs data behaves by landing close to analyst estimates, it will mean the labor market is losing steam.

A worse-than-expected employment report could change the calculus of rate cut expectations, increasing the likelihood that Powell & Co could stop waiting-and-seeing as soon as next month's policy meeting, and lower the Fed funds target rate.

(Stephen Culp)

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