The National Association of Purchasing Management - Chicago compiles a survey and a composite diffusion index of business conditions in the Chicago area. Manufacturing and non-manufacturing firms are both surveyed, but until recently, market players have believed that the survey primarily covers the manufacturing sector. Readings above 50 percent indicate an expanding business sector. The NAPM - Chicago is considered a leading indicator of the ISM manufacturing index. Why Investors Care
| Released on 12/28/07 For Dec 2007 | ||||||||||||
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Highlights
Purchasers in the Chicago area report a rise in orders, both new orders and backlog orders that point to surprisingly strong business activity in the months ahead. New orders rose to 58.4 in December vs. November's 53.9 with backlog orders spiking to 60.7 vs. 45.9. Large swings in this report are common, reflecting a relatively small sample size. But the results are important and do point to low to mid 50 readings in the headline ISM indexes next week.
Chicago's overall index is in line with new orders, rising nearly 4 points to 56.6. Production is at a solid 55.4 though employment dipped about 5 points to 49.0 in what is a further negative for next week's employment report from the BLS. Inventories, at 44.0 vs. 47.1, are lean and healthy with purchasers continuing to draw down stocks despite the pop higher in orders. Prices paid are even a plus showing less severe pressure at 63.8 vs. 76.2.
Financial markets are quiet due to the holidays but today's report is a positive for the outlook, contrasting with weak December indications from the Philadelphia and New York Federal Reserve reports as well as mostly weak holiday statements so far from retailers. Remember the Chicago report includes data on both the manufacturing and non-manufacturing sectors.
The NAPM-Chicago purchasing managers' index improved slightly in November rising to 52.9 from October's nearly dead-flat reading of 49.7. New orders were mildly positive, holding steady at 53.9 for a second straight month. But inflation pressures remain a concern. Prices paid rose 1.5 points to 76.2 in November.
NAPM-Chicago Consensus Forecast for December 07: 52.3
Range: 51.0 to 55.4
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The NAPM-Chicago Survey registers manufacturing and non-manufacturing activity in the Chicago region. Investors care about this indicator because the Chicago region mirrors the nation in its distribution of manufacturing activity. Consequently, the NAPM-Chicago survey often moves together with the ISM index, but is reported one day in advance. |
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