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 6/29/07 For Jun 2007 | ||||||||||||
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Highlights
Chicago purchasers, from both the manufacturing and non-manufacturers sectors, reported rising month-to-month conditions for a fourth straight month in June and sharply rising conditions for a second straight month. The index came in at 60.2 vs. 61.7 in May, showing only the slightest moderation in new order growth to 65.7 vs. May's 71.1. Backlog orders showed little month-to-month change at 50.8 vs. May's 53.0.
Supply chain data showed a slowing in deliveries, up 6.8 points to 52.1, and a greater rise in inventories, up 3.3 points to 55.9. The slowing in delivery time is consistent with the rising pace of activity while the inventory gain may reflect a backing up of shipments due to the slowing in deliveries along with intentional inventory building in anticipation of strong production ahead. Production was very strong in June at 66.5 vs. 69.8.
Other readings included another month of sharp increases for input prices, 68.1 vs. 70.2, that reflect high energy costs and rising costs for metals. Employment growth came back to 52.7 vs. 57.3, but continued overall strength of this month's magnitude will no doubt point to stronger employment readings ahead.
Treasuries softened and the dollar firmed in reaction to the report which will confirm expectations for another strong month of ISM reports, data to be released next week. This morning's personal consumption data may show a slowing on the demand side, but output on the supply side appears to building.
The NAPM-Chicago purchasing managers' index jumped to 61.7 in May from 52.9 in April. This report - which covers both manufacturing and non-manufacturing - is notoriously volatile due to a relatively small sample size. However, other regional manufacturing surveys have been showing a resurgence in strength and markets will be watching to see if this carries over to the Chicago survey.
NAPM-Chicago Consensus Forecast for June 07: 57.5
Range: 55.0 to 61.0
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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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