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 5/31/07 For May 2007 | ||||||||||||
| ||||||||||||
Highlights
Chicago purchasers, representing a mix of both manufacturing and non-manufacturing industries, reported a big jump in business activity in May, to an index reading of 61.7 from 52.9 in April. Huge swings in this report are unfortunately common, with May-to-April's 8.8 point month-to-month change the same as the change from March to April. The change from February to March was even bigger, at 13.8! A likely suspect for the big swings are low sample sizes.
But the report is still important and shows a giant spike in new orders to 71.1 from 56.5 in April. Backlog orders also increased to 53.0 from 48.4. These order readings point to rising production and perhaps to rising employment as well in the months ahead.
Inventories jumped to 52.6 from 43.2 suggesting that purchasers are building up inventories in order to meet production needs. Employment also jumped, up 6.8 points to 57.3 though this reading is a little suspect given a substantial lag between rising demand and the hiring of new employees, which is typically a time-consuming process.
Prices paid jumped from 64.9 to 70.2 for the first 70-plus reading since August last year. The gain no doubt reflects high energy prices but may also reflect rising demand for raw materials.
Treasuries eased but the dollar was little changed in initial reaction to the data, which, despite the report's volatility, are likely to boost expectations for the monthly ISM reports, especially tomorrow's data on the manufacturing side.
The NAPM-Chicago purchasing managers' index fell sharply in April to 52.9 from March's spike at 61.7. Also weak were new orders, backlogs, and inventories. The prices paid index was up sharply due to higher oil prices.
NAPM-Chicago Consensus Forecast for May 07: 54.0
Range: 51.5 to 58.3
![[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. |
| 2007 Release Schedule | ||||||||||||||||||||||||||
|
powered by
![[Econoday]](../../../../../../../../../images/logo.gif){kind=logo}