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 9/28/07 For Sep 2007 | ||||||||||||
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Highlights
Business activity is steady and moderate in the Chicago area as the Chicago purchasers index came in at 54.2 in September vs. 53.8 in August. New orders dipped back a bit but remain a highlight of the report, at 56.2 vs. 58.4. Backlog orders, which contracted steeply in August, showed month-to-month improvement in September at 50.5 (note a 50 reading indicates no month-to-month change). Production is strong at 58.3 vs. 55.7.
Prices paid showed a big improvement and little evidence of the month's $80 oil. The index fell 12.8 points in the month to 59.0 to indicate a month-to-month increase but at a much slower pace. This reading, especially in combination with this morning's very tame PCE price readings, may give a lift to the Treasury market.
Other readings included a second month of inventory contraction, at 38.2 in September. The decrease likely reflects strong production and not an effort by purchasers to trim inventories on worries of overhang. Employment was steady at 52.0, down slightly from August's 53.7.
Chicago's data will firm expectations for moderate to firm readings in next week's ISM manufacturing and non-manufacturing reports. Treasury prices actually dipped in reaction to the overall headline, which was a bit above expectations. But the prices paid reading may yet prove a plus for Treasuries and perhaps stocks too. The dollar firmed in reaction to the report.
The NAPM-Chicago purchasing managers' index held steady and moderate, rising to 53.8 in August from 53.4 the month before. Low to mid 50 readings for the headline composite index as well as the report's sub-indexes indicate that slightly more purchasers in the area reported month-to-month growth than those reporting contraction. New orders, the most important of the sub-indexes, rose to 58.4 from 53.4, pointing to rising production in the months ahead.
NAPM-Chicago Consensus Forecast for September 07: 52.9
Range: 51.5 to 56.0
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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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