Chicago PMI Shows Expansion, but at Slower Pace

Marketwatch details:

Investors were also disappointed Wednesday by a survey of Chicago-area purchasing managers that showed U.S. business activity continued to expand in March, but at a slower pace than the previous month. The Institute for Supply Management-Chicago said its business barometer slipped to 58.8 in March, from a nearly five-year high of 62.6 in February. Economists expected a reading of 60.8.

Still, Croft noted that a reading above 50 still reflects expansion. "We think the economy is marching forward here, but not at an extremely fast pace," he said.

Source: Briefing

Chicago PMI Poised to Show Growth in September

Marketwatch details:

Manufacturing activity improved for the third straight month in the Chicago region in August. The Chicago purchasing managers index rose to 50% in August from 43.4 in July, according to a survey of corporate purchasing managers released Monday. This is just on the threshold of growth and the highest reading since last summer. Readings over 50% indicate overall business expansion.

The Chicago PMI is considered a leading indicator to the national Institute for Supply Management manufacturers' survey to be released on Tuesday. The median forecast for ISM manufacturing composite is for an increase to 50.5 from a July reading of 48.9. The ISM index has not been above 50 since January 2008 at the beginning of the recession.

Source: LSE

Chicago PMI Jumps, but Still Contracting

Briefing.com with the details:

According to the Institute of Supply Management-Chicago and Kingsbury International, Ltd., the Chicago Purchasing Mangers Index increased to 43.4 in July (consensus 43.0) from 39.9 in June. The July reading is the highest reading all year and is comfortably above the 6-month average of 37.3; however, a reading below 50 still signifies contraction. The message once again, then, in the July number is that the rate of decline in manufacturing activity in the Chicago Fed region has slowed. The main point of encouragement with this report is the new orders component. It jumped to 48.0 from 41.6 in June as the region recovers from the depths of the auto industry downturn/restructuring.

Source: Econstats

China Production Continues to Expand

WSJ reports:

The CLSA China Purchasing Managers Index, a gauge of nationwide manufacturing activity, rose to 51.2 in May from 50.1 in April, CLSA Asia-Pacific Markets said Monday.

May was the second consecutive month the CLSA PMI was above 50.0, after eight months of it being below the key level. A PMI reading above 50.0 indicates the manufacturing economy is expanding, while a reading below 50 indicates contraction.

"For the first time the PMI shows genuine evidence that policy really is gaining traction. While the export orders index remained just below the 50 neutral threshold, total orders jumped to the highest level for 10 months," said CLSA's head of economic research, Eric Fishwick.

"The rate of destocking increased in May, encouraging in light of some anecdotal suggestions that production is running ahead of orders. In aggregate the reverse is true, pointing to sustained output growth in months to come," he added.

While I am not an expert to fully grasp whether China is baking the numbers, the tracking error between these PMI figures and electricity numbers are curious. Add to that this tidbit from the WSJ (hat tip Paul Krugman) and I think we should all be at least cautious of the Chinese rebound story.

The focus these days is on the mismatch between China’s electricity consumption and a key measure of industrial output.

For most of the past decade, China’s industrial value-added growth (IVA) –industry output less input costs – has moved broadly in step with movements in electricity consumption. But the relationship’s broken down recently: electricity use is still seeing negative growth, while IVA is growing at a decent positive rate again.

Some China analysts are crying foul: If IVA growth figures are being cooked, surely that means China’s recent GDP data have been overstated too. China’s statisticians use IVA output to estimate what accounts for nearly half of China’s GDP.

China’s association of electricity generators has a solution: it’s stopped publishing consumption data.

Chicago PMI to the Downside

ForexTV reports:

Business activity in the Chicago area suffered more than economists expected in March, with the Chicago Purchasing Managers Index down to 31.4, against expectations of a 34.3 reading.The index came in at 34.2 in February.

The largest drop was in order backlogs, down to 21.3 from 29.3. New orders climbed marginally to 30.9 from 30.6. Falling inflation continues, with the prices paid component dropping to 34.1 from 37.8. Production was down to 32.7 from 34.7.

Inventories climbed to 34.9 from 33.0, and the employment component improved to 28.1 from 25.2.

Source: Econstats

UK PMI

Chicago PMI i.e. "Business Barometer"