Nicholas Tenev

The Chicago Purchasing Managers Index fell to 56.7 in August from 62.3 in July, above our forecast of 56.0 but below the consensus estimate of 57.0. The details were similarly soft, with the production index dropping to 57.6 from 65.0 and new orders falling to 55.0 from 64.6.

The employment index edged only slightly lower, to 55.5 from 56.6, and the order backlog index decreased to 56.2 from 57.6. The supplier deliveries index was the only component to register a gain, rising to 61.2 from 59.4. Outside the five weighted components of the headline index, the inventories index reverted to its June level of 46.5 from 50.8, while the prices paid index slipped further, to 57.2 from 58.1.

While this report indicates some slowing in the Chicago area in August, the levels of the headline and component indices are consistent with continued growth. This suggests that the contraction indicated by the Philadelphia and Kansas City manufacturing indices in August overstates the national trend and supports the case for a softer but persistent manufacturing recovery.

source: BarCap