November 2025 Chicago PMI: A Sharp Contraction Signals Rising Economic Risks
Key Takeaways: The Chicago PMI plunged to 36.30 in November 2025, well below the 44.30 consensus and October’s 43.80. This marks the lowest reading since January 2025 and signals a steep contraction in regional manufacturing activity. Weakness was broad-based, reflecting supply chain disruptions, tighter financial conditions, and subdued demand. The data raises concerns about near-term US industrial growth and adds complexity to the Federal Reserve’s policy outlook amid persistent inflation and geopolitical uncertainties.
Table of Contents
The Chicago Purchasing Managers Index (PMI) for November 2025 fell sharply to 36.30, a steep decline from October’s 43.80 and well below the 44.30 consensus forecast. This figure, sourced from the Sigmanomics database, indicates a pronounced contraction in manufacturing activity within the Chicago region, a key industrial hub in the US Midwest. Historically, readings below 50 signal contraction, and this sub-40 print is the weakest since January 2025’s 39.50, underscoring mounting pressures on the sector.
Drivers this month
- New orders dropped significantly, reflecting weaker demand.
- Supplier deliveries slowed amid ongoing supply chain bottlenecks.
- Employment contracted as firms cut back amid uncertainty.
- Input prices remained elevated, pressuring margins.
Policy pulse
The sharp decline complicates the Federal Reserve’s stance. While inflation remains above the 2% target, the manufacturing slowdown suggests growth risks are rising. This may temper expectations for further aggressive rate hikes, though the Fed remains data-dependent.
Market lens
Immediate reaction: US Treasury 2-year yields fell 8 basis points, and the USD weakened slightly against major currencies within the first hour of the release, reflecting increased risk aversion and growth concerns.
The Chicago PMI is a leading indicator for US manufacturing and broader economic activity. Its November reading of 36.30 contrasts sharply with the 12-month average of 42.50, highlighting a marked deterioration. This decline aligns with other core macroeconomic indicators showing slowing industrial output and weakening business sentiment.
Monetary Policy & Financial Conditions
Rising interest rates and tighter credit conditions have dampened investment and production. The Federal Reserve’s cumulative rate hikes since early 2025 have pushed borrowing costs higher, contributing to the manufacturing sector’s contraction. Financial conditions indices have tightened, reflecting elevated volatility and risk premiums.
Fiscal Policy & Government Budget
Fiscal stimulus has waned in 2025, with government spending growth slowing amid budget constraints. This reduction in fiscal support limits offsetting demand for manufacturing goods, exacerbating the sector’s challenges.
External Shocks & Geopolitical Risks
Ongoing geopolitical tensions, including trade frictions and supply chain disruptions, continue to weigh on manufacturing. Recent sanctions and export controls have further complicated sourcing and production schedules.
This chart signals a clear downward trend in manufacturing activity, reversing earlier stabilization. The steep drop suggests that supply chain issues, demand softness, and tighter financial conditions are converging to slow industrial growth. If sustained, this could presage broader economic weakness in the coming quarters.
Market lens
Immediate reaction: The S&P 500 futures dipped 0.50% post-release, reflecting investor concerns over growth prospects. The USD index softened by 0.30%, while 2-year Treasury yields declined, indicating a flight to safety and expectations of a slower Fed tightening cycle.
The November Chicago PMI reading raises important questions about the US manufacturing outlook and broader economic trajectory. We outline three scenarios based on current data and macro trends:
Bullish scenario (20% probability)
- Supply chain bottlenecks ease in early 2026.
- Fiscal stimulus or infrastructure spending boosts demand.
- Fed signals a pause or slowdown in rate hikes, supporting investment.
- Manufacturing PMI rebounds above 45 by Q2 2026.
Base scenario (55% probability)
- Manufacturing activity remains subdued but stabilizes near 40.
- Inflation gradually declines, allowing measured Fed tightening.
- Global trade tensions persist but do not escalate.
- Modest GDP growth of 1.50%–2% in 2026.
Bearish scenario (25% probability)
- Supply chain issues worsen due to geopolitical shocks.
- Fed maintains aggressive rate hikes, pushing economy into recession.
- Manufacturing PMI falls below 35, signaling deep contraction.
- US GDP growth slows below 1%, with rising unemployment.
Structural & Long-Run Trends
Longer-term, US manufacturing faces structural headwinds from automation, globalization shifts, and energy transition. The recent PMI weakness may accelerate reshoring efforts but also highlights vulnerabilities to external shocks and financial tightening.
The November 2025 Chicago PMI reading of 36.30 is a stark warning signal for US manufacturing and the broader economy. It reflects a confluence of demand weakness, supply chain disruptions, and tighter financial conditions. Policymakers face a delicate balance between containing inflation and supporting growth. Market participants should brace for increased volatility and monitor upcoming data closely for signs of stabilization or further deterioration.
Key Markets Likely to React to Chicago PMI
The Chicago PMI is a bellwether for US industrial activity and thus influences several key markets. The following five symbols historically track or react to shifts in this indicator:
- BA – Boeing’s stock is sensitive to manufacturing cycles and supply chain conditions.
- USDCAD – The USD/CAD pair reacts to US manufacturing data due to trade linkages.
- BTCUSD – Bitcoin often reflects risk sentiment shifts following economic data.
- GE – General Electric’s diversified industrial exposure ties it closely to PMI trends.
- EURUSD – The EUR/USD currency pair often moves on US economic surprises impacting dollar strength.
Chicago PMI vs. BA Stock Price Since 2020
Since 2020, the Chicago PMI and Boeing (BA) stock price have shown a positive correlation, with PMI contractions often preceding declines in BA shares. The November 2025 PMI drop to 36.30 coincides with a 7% pullback in BA over the past month, underscoring manufacturing headwinds impacting aerospace demand and supply chains.
FAQs
- What is the Chicago PMI?
- The Chicago PMI is a monthly survey measuring manufacturing activity in the Chicago region, serving as a leading economic indicator.
- Why does the Chicago PMI matter for the US economy?
- It reflects regional manufacturing health, which often signals broader industrial trends and economic momentum in the US.
- How does the Chicago PMI affect financial markets?
- Surprises in the PMI can move stock prices, bond yields, and currency pairs by altering growth and inflation expectations.
Takeaway: The November Chicago PMI’s sharp contraction signals rising risks to US manufacturing and growth, demanding close monitoring of upcoming data and policy responses.
Key Markets Likely to React to Chicago PMI
The Chicago PMI’s sharp decline typically triggers moves in industrial stocks, US dollar pairs, and risk-sensitive assets. Boeing (BA) and General Electric (GE) are direct beneficiaries or victims of manufacturing trends. Currency pairs like USD/CAD and EUR/USD respond to shifts in US economic momentum. Bitcoin (BTCUSD) often reflects broader risk sentiment changes following such data releases.
Chicago PMI vs. BA Stock Price Since 2020
Analysis of monthly Chicago PMI readings alongside Boeing’s stock price reveals a strong positive correlation. Periods of PMI contraction, such as early 2025 and now November 2025, coincide with notable declines in BA shares, highlighting the sensitivity of aerospace manufacturing to regional industrial conditions.
FAQs
- What is the Chicago PMI?
- The Chicago PMI is a regional manufacturing survey indicating economic activity levels in the US Midwest.
- Why is the Chicago PMI important for investors?
- It provides early signals on manufacturing trends that influence corporate earnings and market sentiment.
- How does the Chicago PMI impact Federal Reserve decisions?
- The PMI informs the Fed about growth momentum, helping guide interest rate policy amid inflation concerns.
Takeaway: The November 2025 Chicago PMI’s steep drop highlights growing headwinds for US manufacturing and the broader economy, warranting cautious positioning and vigilant data monitoring.
This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.
BA – Boeing, sensitive to manufacturing cycles and supply chain disruptions.
USDCAD – USD/CAD currency pair, influenced by US manufacturing data and trade flows.
BTCUSD – Bitcoin, reflecting risk sentiment shifts tied to economic data.
GE – General Electric, industrial conglomerate linked to manufacturing trends.
EURUSD – EUR/USD currency pair, reacting to US economic surprises and dollar strength.
The Chicago PMI’s November 2025 reading of 36.30 represents a sharp drop from October’s 43.80 and is well below the 12-month average of 42.50. This decline reverses the modest rebound seen in Q3 and signals a renewed contraction phase in regional manufacturing.
Compared to the January 2025 low of 39.50, the current print is the weakest in nearly a year, underscoring intensifying headwinds. The index components reveal broad-based weakness, with new orders and production indices falling below 35, while supplier deliveries and employment indices also contracted.