CHICAGO PMI EXPLODES HIGHER ON LARGEST EMPLOYMENT GAIN SINCE 2002

The headline index reading unexpectedly rose to 55.6 from last month's downwardly-revised reading of 50.0.

Economists expected the index to clock in at 50.5 this month.

The gains were led by production and new orders, which both climbed to 10-month highs.

The employment sub-component surged to 58.0 from last month's reading of 46.8 – the largest gain since February 2002.

Order backlogs experienced a sixth consecutive month of contraction.

TD Securities economist Millan Mulraine said in a note following the release, "The strong gains across the board in this report point to an up-tick in tomorrow's ISM manufacturing index, which we expect to post a modest rise to 51.1 (current consensus if for a 50.6 print). Moreover, the surge in the forward-looking indicators suggests this positive momentum could be sustained in the coming months."

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Several regional manufacturing indicators have been weak in January – including data out of the Philadelphia Fed, the New York Fed, and the Kansas City Fed.

On the other hand, the Dallas Fed reported strong regional manufacturing data, and Markit's advance estimate of national PMI rose above expectations.

Add Chicago PMI to the list of positive January data.