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 6/30/08 For Jun 2008 | ||||||||||||
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Highlights
Chicago purchasers report flat month-to-month conditions in June, showing a headline index of 49.6, up 5 tenths from May and virtually at the dead-even 50 level. New orders slowed but still showed month-to-month improvement at 52.0, while employment showed less weakness at 46.7 for a 5.5 point jump in the month.
Supply chain readings indicate strength in the month, including a more than 8 point spike in inventories to 50.5 and a nearly 8 point spike in deliveries to 58.8. These readings suggest that businesses are no longer working down stocks and that the supply chain is becoming congested.
Two negative readings are a 5 point drop in production to 45.1 and a nearly 5 point drop in backlog orders to 42.3. Backlogs in any case are at unusually high levels due to aircraft orders. Prices paid remain severely elevated at 85.5, in line with a long run of price-hike announcements during the month last seen in the aftermath of Hurricane Katrina in 2005.
Point movements in this report are often severe reflecting a smaller sample base than other business surveys such as the national purchasing reports from the Institute For Supply Management. But today's results point squarely at another month of roughly 50 point headlines for Tuesday's ISM report on manufacturing and Thursday's ISM report on non-manufacturing -- which is good news considering concern that these reports may begin to shift lower. The dollar firmed slightly while Treasury yields rose slightly in reaction to the data.
The NAPM-Chicago purchasing managers' index improved in May, rising to 49.1 from 48.3 in April. Strength was led by new orders which rose more than 3 points to 56.1 indicating that significantly more firms in the area enjoyed a month-to-month increase than a decrease. Backlog orders improved, becoming less negative with a reading of 46.8 and snapping three straight months in the 30s range. Production showed a month-to-month increase at 51.5, while contraction in employment slowed to 41.2 from April's dismal 35.3 reading. But inflation news was very bad as prices paid jumped to 87.5 in May from 82.9 the month before.
NAPM-Chicago Consensus Forecast for June 08: 48.0
Range: 47.0 to 51.0
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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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