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Chicago PMI Bounce Stalls, "Firms At Risk Of Being Over-Inventoried"

Tyler Durden's picture
Submitted by Tyler Durden on 08/31/2015 09:52 -0400



 

Following this morning's ISM Milwaukee disappointment, missing for the 8th month sof the last 9 (printing 47.67 vs 50.00 exp and hovering at 2 year lows) with production and prices plunging, Chicago PMI just printed a slightly disappointing 54.4 (against expectations of 54.5). After last month's surprise bounce, this slowdown suggests there is little to no momentum in any 'recovery' stemming from a Q2 bounce. Weakness under the surface is broad and as purchasers warned "failure of New Orders to materialize "within the next few weeks" could put firms at risk of being over-inventoried and curtail producton levels." Perhaps most worrying though is the 4th consecutive contraction in employment... but the recovery?

 

Production and Prices plunged holding Milwaukee's ISM near 2-year lows...

 

But then Chicago PMI hit...

 

And underlying factors were weak...

  • MNI CHICAGO REPORT: BAROMETER 54.4 AUG VS 54.7 JUL SEASADJ
  • MNI CHICAGO: SUPPLIER DELIVERIES RISE TO HIGHEST SINCE MARCH
  • MNI CHICAGO: EMPLOYMENT UP BUT IN CONTRACTION FOR 4TH MONTH
  • MNI CHICAGO: PRICES PAID FALL BACK BELOW 50
  • MNI CHICAGO: INVENTORIES COMPONENT HIGHEST SINCE NOV 2014
  • MNI CHICAGO: ORDER BACKLOGS CONTRACT AT FASTER RATE
  • MNI CHICAGO: PRODUCTION AND NEW ORDERS EASE SLIGHTLY

Some purchasers reported enough work to keep their facilities "busy" but said that there were a lot of small orders with large orders lacking.

Part of the resilience in Production and New Orders was due to stock growth as companies built inventories at the fastest pace since November 2014.

*  *  *

Judging by the market's response - it appears bad news is now bad news.

 

Charts: Bloomberg

 
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Mon, 08/31/2015 - 09:53 | 6489895 buzzsaw99
buzzsaw99's picture

chicago pmi, lulz

Mon, 08/31/2015 - 09:56 | 6489904 NoDebt
NoDebt's picture

Recessions no longer cause market crashes.  Market crashes cause recessions.  

Mon, 08/31/2015 - 09:57 | 6489911 RopeADope
RopeADope's picture

So it isn't about China after all.

Mon, 08/31/2015 - 09:58 | 6489916 the not so migh...
the not so mighty maximiza's picture

fuckin joke

Mon, 08/31/2015 - 09:58 | 6489919 corporatewhore
corporatewhore's picture

interesting.  in the glass industry almost every part we order isn't in stock from our distributors. they must be operating really thin.

Mon, 08/31/2015 - 09:59 | 6489929 NoDebt
NoDebt's picture

Where price fails to be the allocator of resources, scarcity never fails.

Mon, 08/31/2015 - 10:05 | 6489952 Headbanger
Headbanger's picture

Inventory hoarding possibly?

In case all lines of credit are cut off by major bank runs starting soon???

Mon, 08/31/2015 - 12:46 | 6490658 Arnold
Arnold's picture

Inventory costs money, a cost that you can outsource to originating suppliers.

 

Kinda like the Amazonia model.

Or earlier model  Just in Time.

Mon, 08/31/2015 - 10:18 | 6490015 Dr. Engali
Dr. Engali's picture

Let me repeat.... nobody has any fucking money. You can build it, but nobody can afford to come!

Mon, 08/31/2015 - 10:44 | 6490106 Bryan
Bryan's picture

We Over-Inventoried some folks.

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