Chicago PMI Continues Torrid Pace

The Chicago PMI continues its torrid pace, at 65.5 in July to top Econoday's consensus range and the strongest showing since January this year. New orders and production are also the strongest since January with backlogs the highest since October last year.

The pressure is being reflected in prices with input costs at their highest level of the ongoing expansion, since September 2008. The report notes that price pressures are also attributable to recently imposed tariffs on imports. Delivery times remain elevated and are contributing to an inventory draw down of raw materials. Skilled labor is still in short supply but the sample is nevertheless adding staff.

Rising costs and capacity stress aside, the Chicago sample's confidence is strong with over half expecting third-quarter orders to exceed those of the second quarter.