Chicago PMI Looks Strong, Shows Weakness

The headline for August looks solid, at 54.4 for the Chicago PMI, but the details look weak. New orders and production both slowed and order backlogs fell into deeper contraction. Employment contracted for a fourth straight month while prices paid fell back into contraction. Lifting the composite index are delays in shipments which point to tight conditions in the supply chain. Inventories rose sharply in the month and the report hints that the build, despite the weakness in orders, was likely intentional. But strength is less than convincing and this report suggests that activity for the Chicago-area economy may be flat going into year end.

Recent History Of This Indicator:
The Chicago PMI is expected to hold little changed, up 2 tenths to a consensus 54.9 that would point to solid monthly growth in the Chicago-area economy. This index had been below breakeven 50 in four of the prior five months.