Econintersect: The Chicago Purchasing Managers Index improved slightly for the second month in a row after June's largest drop in almost five years.
The Chicago Business BarometerTM increased to 53.0 in August from 52.3 in July, led by an increase in New Orders and a second monthly gain in Order Backlogs. Order Backlogs, though, remained in contraction after a record plunge in June.
The market was expecting a value of 51.5 versus the reported value of 52.3. A number below 50 indicates contraction.
The August data showed a second month of stabilisation in the Barometer compared with the erratic moves seen in the second quarter. This stability came, however, at fragile levels leaving the Barometer within striking distance of the breakeven 50 level, and below the average seen over the past 10 years of 55.9.
Production, Employment and Supplier Deliveries all fell between July and August, although all remained above 50. Production was down for the third consecutive month while Employment slowed for a second month in August.
Inventories continued to contract, but at a slower pace than in July and Prices Paid rose for a fourth consecutive month.
Little change in Supplier lead times contrasted with significant lengthening in Buying Policies for Production Materiel and Capital Equipment in August.
Commenting on the MNI Chicago Report, Philip Uglow, Chief Economist at MNI Indicators said, “A pick-up in New Orders helped push the Barometer slightly higher in August, but activity still remains below trend."
The Chicago ISM is important as it is a window into the national ISM reports which will be issued shortly. When you compare the graph below of the ISM Manufacturing Index against the Chicago PMI (graph above) - there is a general correlation in trends, but not necessarily correlation in values.
source and read the full report: Chicago PMI