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 7/31/07 For Jul 2007 | ||||||||||||
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Highlights
Always volatile, the Chicago purchasers' index fell to 53.4 in July from 60.2 in June, pointing to an abrupt slowing in the rate of growth in the area's manufacturing and non-manufacturing sectors. New orders fell in line with the main index, down also to 53.4 vs. June's 65.7. Really showing the volatility of the report are backlog orders, which showed severe month-to-month contraction, at 37.4 vs. 50.8 in June.
Though backlogs declined, inventories were not depleted with the inventory index signaling steady accumulation, 55.1 vs. 55.9. Delivery times did slow, to 55.3 from 52.1 in a reading consistent with a working down in backlogs and an increase in production, which did show a month-to-month gain but at a slower pace than June, 59.0 vs. 66.5. The report's two other readings were a further rise in prices paid, 73.1 vs. 68.1, and a jump in employment to 61.6 vs. 52.7.
It's hard to make much of this report given volatility throughout. There was no reaction in the financial markets. The next report from purchasers will be at the national level from the ISM, first manufacturing on Wednesday then non-manufacturing on Friday.
The NAPM-Chicago purchasing managers' index remained relatively strong in June at 60.2 vs. 61.7 in May. We could see some strengthening, given that new orders were strong in both May and June.
NAPM-Chicago Consensus Forecast for July 07: 58.0
Range: 56.0 to 64.0
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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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