Econintersect: The Chicago Purchasing Managers Index had the largest drop in almost five years.
The Chicago Business Barometer declined to 51.6 in June, the largest monthly drop since October 2008, and down from a 14-month high of 58.7 in May. The gyrations seen over the past few months are not typical for the Barometer and some of this might be attributable to the unseasonable weather conditions.
The market was expecting a value of 52.0 to 55.5 versus the reported value of 51.6. A number below 50 indicates contraction.
Of the five Business Activity measures which make up the Barometer, four declined with only the Employment indicator posting an increase. Order Backlogs plunged deep into contraction to the lowest level since September 2009 and was the single biggest drag on Barometer. Faster Supplier Delivery times and declines in Production and New Orders also contributed to the Barometer’s weakness.
Prices Paid posted the second consecutive monthly increase, following a lull in April, putting it back in line with levels seen at the start of the year.
Commenting on the MNI Chicago Report, Philip Uglow, Chief Economist at MNI Indicators said:
“Activity dropped back in June following the large rise in May. The trend level of the Barometer has picked up since the fourth quarter of 2012, and while these latest data point to some weakening between the first and second quarter, it is too early to say if this will continue.”
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
