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 7/31/08 For Jul 2008 | ||||||||||||
| ||||||||||||
Highlights
The Chicago purchasers' report broke a string of five straight sub-50 readings, though just barely with a 50.8 level in July for a 1.2 percentage point gain on the month. New orders have been solid in this series and remain so, at 53.5 vs. 52.0 in June and 56.1 in May. Production has been mixed, swinging in wide moves centered at 50. July's reading for this component came in at 49.2 vs. 45.1 in June. Inventories were very strong in the month, at 54.9 for a nearly 5 point gain and the highest reading in more than a year. Given the long string of strength in new orders, the inventory rise suggests that purchasers are stocking up to meet future production needs. They aren't, however, hiring to meet those needs as the employment index, little changed at 45.9, extended to seven months its string of sub-50 readings -- not a good indication for tomorrow's employment report. A real oddity in the report is delivery time which at 60.8, up 2 points in the month, indicates increasing extensions, extensions not consistent with levels of production.
Prices paid is a big headline in the report, at 90.7 for the highest reading since a 90.9 level in March 1980. But sample size in this report is generally small, a fact that diminishes the impact of the reading. Also diminishing the impact is the fact that June's prices paid index in the ISM manufacturing report was 91.5, also its highest reading in a generation. The ISM's prices paid index on the non-manufacturing side, at 84.5 in June, was a record. Remember Chicago data come from both the manufacturing and non-manufacturing sides. In any case, businesses have so far been able to absorb high input costs through productivity improvements and, unfortunately, by selectively paring back their workforces.
The markets showed a tiny bit of immediate reaction to strength in the report's headline though stocks, the dollar and Treasury yields then quickly ebbed lower. The overall economic outlook is one of weakness or at best, as indicated by this report, flat conditions.
The NAPM-Chicago purchasing managers' index continued to report flat month-to-month conditions in June, showing a modest 5 tenths gain to 49.6. The latest number is the strongest since January's 51.5 reading as the index has been below the breakeven mark of 50 for five consecutive months. Looking ahead, other components suggest little near-term improvement. New orders slowed in the latest month and barely remained in positive territory, coming in at 52.0. The backlog index fell almost 5 points to 42.3.
NAPM-Chicago Consensus Forecast for July 08: 49.0
Range: 48.0 to 50.1
![[Chart]](chart.gif)
|
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. |
| 2008 Release Schedule | ||||||||||||||||||||||||||
|
powered by
![[Econoday]](../../../../../../../../../images/logo.gif){kind=logo}