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 3/31/08 For Mar 2008 | ||||||||||||
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Highlights
Chicago purchasers report less weakness in March with the headline index up nearly 4 points but to a still sub-50 level of 48.2. The best news is a jump in new orders, up more than 5 points to 53.9 and ending back-to-back sub-50 readings that indicated contraction in February and January. Production also moved back above 50, up nearly 4 points to 50.4 in an increase that apparently slowed delivery times which rose to 54.9 from 39.6.
But other readings showed continued weakness including employment which did bounce back, likely on the increase in production, but still shows contraction at 44.6. Inventories contracted for a second month while backlogs fell 1-1/2 points to a dismal 36.8 that indicates wide reports of weakness.
But the worst news in the report is another rise in prices paid, up 4.5 points to 83.9 and reflecting high fuel costs and also high costs for other raw materials including steel. Treasuries were little changed in reaction to the report though the dollar and stocks firmed. Durable goods data contracted in February and January, but the new order data in this report will raise talk of a bounce in March. Remember, however, this report is very volatile and, though traditionally looked at as a barometer for manufacturing activity, also includes non-manufacturers in its sample.
The NAPM-Chicago purchasing managers' index fell in line with other business surveys to show contraction, at 44.5 in February versus 51.5 in January and after a healthy level in December. For the latest month, new orders remain notably negative at 48.8 even though it is less negative than January's 44.7. But the prices paid index remains severely elevated at 79.4, largely reflecting costs of materials.
NAPM-Chicago Consensus Forecast for March 08: 46.0
Range: 40.0 to 50.0
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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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