Chicago PMI Composite Decreases To Two Year Low

Volatility isn't that unusual for the Chicago PMI whose sample reports abrupt slowing in January. At 56.7, the composite is down more than 7 points from December with production slowing a 10-month low and new orders to a 2-year low.

An interesting twist is that the report attributes the fall in orders, in part, to sellers unable to get their price. This may be an indication that cost pressures are pushing up selling prices perhaps too far. Respondents in the sample continue to report steady but elevated costs for raw materials and metals.

Easing in capacity stress, evident in the December report, picked up pace with supplier deliveries improving and helping to pull down the composite. Hiring held steady and inventories fell slightly.

Following this morning's jolt in jobless claims, this report likewise hints at January trouble and especially volatility, which would be consistent perhaps with the effects of a government shutdown.