Chicago PMI Growth Eases, Still Strong

An unusually strong rate of growth eased a bit as expected for the Chicago PMI in August, to 63.6 vs July's 65.5 which was the strongest showing since early in the year.

But growth in new orders did continue to accelerate, at least slightly in August, though the build in backlogs slowed. Improvement in delivery times is also a plus in the August report which helped Chicago's sample to build inventories in the month. Hiring slowed as did pressures on input costs which nevertheless are near 11-year highs and which many respondents are blaming on trade disputes. In a special question, 60 percent of the sample reports passing higher costs to their customers.

This year's strength of the Chicago PMI is hard to overstate and makes monthly comparisons difficult, but the month's slowing is consistent with similar results seen in some of the other small-sample surveys and hints perhaps at a slower rate of growth for the August economy in general.