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 4/30/08 For Apr 2008 | ||||||||||||
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Highlights
Chicago purchasers report steady month-to-month conditions with their index little changed at just below the break-even 50 level, at 48.3 in April for a 1 tenth gain from March. New orders show a mild but steady rate of month-to-month increase, at 53.0 vs. 53.9 in March, but backlogs continue to contract, at 39.5 vs. March's 36.8 for a fourth straight sub-50 reading. Production picked up in the month to 53.0 from 50.4, though Chicago area firms aren't adding new workers as the employment index indicates wide layoffs, at 35.3 vs. 44.6 in March. Inventories jumped nearly 10 points in the month to 51.9 in what, if not for the rise in new orders and production, would indicate an unwanted building of stocks. The inventory jump could be tied to slowing deliveries as the supplier delivery index, at 52.5, indicates that more respondents are reporting slower deliveries than faster deliveries. But the Chicago report is typically very volatile making cause and effect difficult to gauge especially in the supply chain readings.
One reading that's very clear and that confirms similar readings in other business surveys is continued and severe cost pressures for raw materials, the result of high energy costs. The prices paid index came in at 82.9, down 1 point in the month but still indicating that the great majority of respondents, in this case 75 percent, are reporting month-to-month increases in costs.
There was no immediate reaction to the report which however should ease talk that either of the upcoming ISM reports, which track purchasers nationwide, may plunge.
The NAPM-Chicago purchasing managers' index in March showed a contraction but not as steep as the prior month. The headline index rose nearly 4 points but to a still sub-50 level of 48.2. The new orders index suggested future improvement in the overall index as it increased more than 5 points to 53.9 and ended back-to-back sub-50 readings. The worst news in the report was another rise in prices paid, which jumped 4.5 points to 83.9 reflecting high fuel costs and also high costs for other raw materials including steel.
NAPM-Chicago Consensus Forecast for April 08: 47.5
Range: 45.0 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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