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Chicago PMI at 50.4 in April vs. 53.0 reading expected

A worker making parts for commercial coffee grinding equipment at the Modern Process Equipment manufacturing facility in Chicago.
Tim Boyle | Bloomberg | Getty Images
A worker making parts for commercial coffee grinding equipment at the Modern Process Equipment manufacturing facility in Chicago.

The Chicago Purchasing Managers Index came in at 50.4 for April, missing economists' estimates and led by a decline in new orders and a sharp drop in order backlogs.

Economists polled by Reuters had expected a reading of 53.0, down from the 53.6 reading reported a month earlier. A reading above 50.0 indicates expansion in the sector.

The report suggested that a growing number of panelists were concerned or uncertain about the impact of an interest rate hike by the Federal Reserve.

In a special question, 35.7 percent of respondents said a rate hike in the next six months would not have an impact on business activity, while 35.7 percent were uncertain. Nearly 30 percent said it will have an impact, however, with some commenting that it would affect business growth and capital investment plans.

When the same question was asked in April 2015, half of the panelists said it wouldn't affect business, while only 21.2 percent said they expected to see an impact on business activity.

"This was a disappointing start to the second quarter, with the barometer barely above the neutral 50 mark in April," Chief Economist of MNI Indicators Philip Uglow said. "Against a backdrop of softer domestic demand and the slowdown abroad, panellists are now more worried about the impact a rate hike might have on business than they were at the same time last year."