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 9/30/08 For Sep 2008 | ||||||||||||
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Highlights
Business activity in the Chicago area posted a second month of healthy growth, pointing to stable -- not declining -- results for national purchasing reports from the ISM on Wednesday and Friday. The Chicago purchasers' index dipped 1.2 points in September to a still very solid 56.7, the second strongest reading since June last year and reflecting a big jump in production (71.4 Sep vs 63.4 Aug) and big improvement in employment (49.1 vs. 39.2). Order data remain over 50 to indicate month-to-month growth though rates of growth did slow: new orders (53.9 vs. 60.2), backlog orders (54.9 vs. 63.0).
A clear positive in the report was a steep drawdown in inventories (37.7 vs. 52.2), a result that may ease concern of overhang. Interestingly, prices paid (80.7 vs 80.6) showed no easing in pressure despite the ongoing decline in energy prices. Company news in recent weeks has been heavy with price-hike announcements as firms continue to try to pass through high raw material costs to their customers. Pricing power of course is an indication of healthy demand. Markets showed no reaction to the results.
The NAPM-Chicago purchasing managers' index jumped to 57.9 from 50.8 in July. The gain reflected large jumps in new orders - to 60.2 from 53.5 -- and production - to 63.4 from 49.2. Input prices remained elevated but a little less severely at 80.6 for a 10.1 point drop from July.
NAPM-Chicago Consensus Forecast for September 08: 53.0
Range: 49.0 to 57.5
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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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