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 1/31/08 For Jan 2008 | ||||||||||||
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Highlights
The monthly business activity report from Chicago purchasers is once again very volatile but the bottom line is very clear -- weakness. The headline composite index fell back about 5 points to 51.5 but new orders are probably the most important reading of any and it fell badly, from a very healthy 56.7 in December to a very weak 44.7 in a sub-50 reading that indicates month-to-month contraction. Backlog orders also fell badly, down more than 12 points to 48.0.
Without orders, production is certain to slow in the coming months and is already slowing, down nearly 11 points to 51.3. Inventories spiked higher, up about 7 points to 51.1 and no doubt reflecting back up from slow production. Supplier deliveries reflect the lack of activity, up 13 points to 61.7 as only a small portion of purchasers are reporting delays.
These readings are scary enough but prices paid, up about 14 points, is at 81.7 to indicate wide month-to-month pressures. This report points to stagflation and will raise concern over the coming ISM national reports beginning with manufacturing tomorrow. There was no significant reaction to the report.
The NAPM-Chicago purchasing managers' index has been a little stronger than other regional indexes, rising to 56.6 in December from 52.0 the month before. In the latest month, both new orders and backlog orders were surprisingly strong. Prices paid improved somewhat while still remaining high, slipping to 63.8 from 76.2 in November.
NAPM-Chicago Consensus Forecast for January 08: 52.0
Range: 50.0 to 53.0
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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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