Need To Know News

• August Chicago PMI is expected to fall to 50 from 50.8 in July

Manufacturing in the Chicago region has remained relatively firm considering the mounting downside risk affecting the sector. Despite the moderate decrease expected in August, Chicago PMI should remain above the 50 threshold for a third consecutive month as Chicago PMI continues to outperform other major manufacturing index regions in the US. The index should benefit from prior-month increases in the New Orders, Shipments and Deliveries indices.

Downside risk include a prior-month decrease in the Employees Index as well as prior month increases in the indices for backlogs, inventories and prices paid. The July Prices Paid Index grew to 90.7, which was the highest reading since 1980. Manufacturers in the region will eventually have to compensate for higher prices via offsets in employment and the prices in which they charge, even though energy prices declined considerably over the period.

New Orders: 53.5 vs. 52 prior

Prices Paid: 90.7 vs. 85.5 prior, highest since 1980

Employment: 45.9 vs. 46.7 prior

July Chicago PMI is expected to is expected to fall to 49 from 49.6 in June. The index is expected to remain in contraction territory (below 50), but continue the noticeable improvement from the multi-year low of 44.5 in February.

The index for new orders fell to 52 in June from 56.1 in May. The shipments figure fell to 45.1 from 51.5, while the employment index grew to 46.7 from 41.2. Te prices paid index fell to 85.5 in June from 87.5 in July.

Expectations for a muted July Chicago PMI reading fall directly in line with major regional manufacturing surveys, including the July Empire Fed Index which improved to -4.92 in July from -8.68 in June, and the Philly Fed Index, which improved to -16.3 in July from -17.1 in June.

**Chicago Purchasing Manager subscribers have access to Chicago PMI about 15minues before its public release at 9:45am EDT.

July Chicago PMI is expected to is expected to fall to 49 from 49.6 in June. The index is expected to remain in contraction territory (below 50), but continue the noticeable improvement from the multi-year low of 44.5 in February.

The index for new orders fell to 52 in June from 56.1 in May. The shipments figure fell to 45.1 from 51.5, while the employment index grew to 46.7 from 41.2. Te prices paid index fell to 85.5 in June from 87.5 in July.

Expectations for a muted July Chicago PMI reading fall directly in line with major regional manufacturing surveys, including the July Empire Fed Index which improved to -4.92 in July from -8.68 in June, and the Philly Fed Index, which improved to -16.3 in July from -17.1 in June.

**Chicago Purchasing Manager subscribers have access to Chicago PMI about 15minues before its public release at 9:45am EDT.

June Chicago Purchasing Managers Index: 49.6 vs. 48 expected and 49.1 prior

New Orders: 52 vs. 56.1 prior
Prices Paid: 85.5 vs. 87.5 prior
Employment: 46.7 vs. 41.2 prior

June Chicago PMI is expected to fall to 48.4 from 49.1 in March which would be well off the multi-year low of 44.5 in February but still reflecting overall industry contraction.

In general, Chicago PMI has remained steadfast when compared with historical data associated with recession. New Orders came in at 56.1 in May and should remain strong in June. Shipments in May backed off from 53 in April but remained in expansion mode at 51.5. May deliveries came in at 51 from 52.5 in April.

Backlogs came in at 46.8 in May from 39.5 in April, while inventories fell from 51.9 to 42.2. The Employees index was weak at 41.2 but much improved from the 35.3 reading in April.

The Prices Paid index, which came in at 87.5 in May from 82.9 in April, is likely to remain elevated and will be of interest to FED-watchers.

Both the Empire Fed and Philly FED indices came in lower than expected in June which suggests a stagnant environment in US manufacturing over the period.

Empire FED Index: -8.7 VS. -3.2 prior
Prices Paid: 66.3 vs. 69.6 prior
Prices Received: 26.7 vs. 15.2 prior
New Orders: -5.5 vs. -0.5 prior

Philly FED Index: -17.1 vs. -15.6 prior
Prices Paid: 69.3 vs. 53.8 prior (Prices Paid at highest since 1980)
Employment: -6.9 vs. -1 prior
New Orders: -12.4 vs. -3.7 prior

** Note: June NAPM Milwaukee — 45 in April — will be released 15 minutes after Chicago PMI.

June Chicago PMI is expected to fall to 48.4 from 49.1 in March which would be well off the multi-year low of 44.5 in February but still reflecting overall industry contraction.

In general, Chicago PMI has remained steadfast when compared with historical data associated with recession. New Orders came in at 56.1 in May and should remain strong in June. Shipments in May backed off from 53 in April but remained in expansion mode at 51.5. May deliveries came in at 51 from 52.5 in April.

Backlogs came in at 46.8 in May from 39.5 in April, while inventories fell from 51.9 to 42.2. The Employees index was weak at 41.2 but much improved from the 35.3 reading in April.

The Prices Paid index, which came in at 87.5 in May from 82.9 in April, is likely to remain elevated and will be of interest to FED-watchers.

Both the Empire Fed and Philly FED indices came in lower than expected in June which suggests a stagnant environment in US manufacturing over the period.

Empire FED Index: -8.7 VS. -3.2 prior
Prices Paid: 66.3 vs. 69.6 prior
Prices Received: 26.7 vs. 15.2 prior
New Orders: -5.5 vs. -0.5 prior

Philly FED Index: -17.1 vs. -15.6 prior
Prices Paid: 69.3 vs. 53.8 prior (Prices Paid at highest since 1980)
Employment: -6.9 vs. -1 prior
New Orders: -12.4 vs. -3.7 prior

** Note: June NAPM Milwaukee — 45 in April — will be released 15 minutes after Chicago PMI.

The May reading of 49.1 compares to a prior reading of 48.3 in April.

New Orders: 56.1 (53 prior)
Prices Paid: 87.5 (82.9 prior)
Employment: 41.2 (35.3 prior)

May Chicago PMI is expected at 48.5 from 48.3 in April, 48.2 in March and 44.5 in February, which was the lowest reading on record.

The New Orders Index came in at 53 in April from 53.9 in March. The Shipments Index was 53 from 50.4 in March, and the Employment Index was 35.3 from 44.6 in March. The Prices Paid Index came in at 82.9l from 83.9 prior. The Inventories Index came in at 51.9 in April from 42 in March.

A muted month for the US manufacturing sector is expected with continued downside risks from higher food and energy costs, declining real earnings, and deteriorating consumer confidence. The April UofM Consumer Confidence survey fell to 59.5, the lowest reading since 1980.

The indices for Chicago PMI shipments, deliveries and new orders all remain above the contractionary threshold, which may yield a surprising upturn in the April index. Any significant improvement in the index, however, may be brief as economic roadblocks continue to impede the US manufacturing sector.

Related data:

• May Richmond FED Index: -3 from 0 in March
• May Philly FED Index: -15.6 from -24.9 in March
• May Empire State Index: -3.2 from 0 in March
• April ISM Manufacturing Index: 48.6 from 48.6 in March

May Chicago PMI is expected at 48.5 from 48.3 in April, 48.2 in March and 44.5 in February, which was the lowest reading on record.

The New Orders Index came in at 53 in April from 53.9 in March. The Shipments Index was 53 from 50.4 in March, and the Employment Index was 35.3 from 44.6 in March. The Prices Paid Index came in at 82.9l from 83.9 prior. The Inventories Index came in at 51.9 in April from 42 in March.

A muted month for the US manufacturing sector is expected with continued downside risks from higher food and energy costs, declining real earnings, and deteriorating consumer confidence. The April UofM Consumer Confidence survey fell to 59.5, the lowest reading since 1980.

The indices for Chicago PMI shipments, deliveries and new orders all remain above the contractionary threshold, which may yield a surprising upturn in the April index. Any significant improvement in the index, however, may be brief as economic roadblocks continue to impede the US manufacturing sector.

Related data:

• May Richmond FED Index: -3 from 0 in March
• May Philly FED Index: -15.6 from -24.9 in March
• May Empire State Index: -3.2 from 0 in March
• April ISM Manufacturing Index: 48.6 from 48.6 in March