Chicago PMI Soars To Highest Since January With 7-Sigma Beat On Huge Inventory Build

Having spent most of 2015 below the 50 (deteriorating) level, Chicago PMI bounced incredibly hard in October from 48.7 to 56.2. This is the highest level since January, the biggest MoM jump since August 2014, and above even the highest economist estimate (7 standard deviations above the median). A huge surge in inventories (back above 60) drove the surprising shift, along with a rise in new orders (even as employment tumbled) but as MNI reports, in line with weaker Order Backlogs, other metrics of the report caution against reading too much into the latest surge in demand.  Supplier Delivery times continued to shorten, a phenomena that  typically occurs when demand is low.

Biggest MoM jump in 14 months...

Beats Expectations... by 7 Standasrd deviations - Looks right!!!

A surge in inventories was the biggest driver...

INVENTORIES INCREASE SHARPLY TO ABOVE 60

Stocks of finished goods rose to above 60 as some companies intentionally built stocks as demand increased and in an effort to be prepared for the new cold weather selling season.

Concerns now rest with being over-inventoried as winter is predicted to be mild, purchasers said.

but apart from that things looked less exuberant...

Elsewhere, Prices Paid contracted for the third consecutive momth, remaining very close to September's more than six-year low year low as commodity prices remained depressed, particularly crude oil during the month.

In line with weaker Order Backlogs, other metrics of the report caution against reading too much into the latest surge in demand. Supplier Delivery times continued to shorten, a phenomena that typically occurs when demand is low.

Especially jobs - Chicago PMI employment: down 1.7 to 50.6, the lowest since August. "Commentary suggests ... heavy reliance on temporary workers. "

Employment broke a recent three month winning streak, falling 1.7 to 50.6, the lowest since August. Commentary from purchasers continued to suggest the workforce can easily be expanded or contracted due to heavy reliance on temporary workers. Ongoing commentary suggests difficulty in acquiring qualified workers.

Charts: Bloomberg

Comments

[Latina Lover]

WTF!

[hedgeless_horseman]

A huge surge in inventories...

...in Illinois Lottery Tickets.

[Latina Lover]

https://en.wikipedia.org/wiki/Standard_deviation

Odds of winning this lottery are:

7? 99.9999999997440% 0.000000000256% 1 / 390,682,215,445

[venturen]

Same as the FED raising rates

[Latina Lover]

+ Googleplex!

[hedgeless_horseman]

Odds of winning this lottery are:

7?
99.9999999997440%
0.000000000256%
1 / 390,682,215,445

I was told there would be no math.

I will take five of the Scratch and Win, please.

[Latina Lover]

Common Core Education:   2+2=4, provided no one is offended or marginalized.

[ajkreider]

The odds of a payout . . .

[yogibear]

You'll have to settle for IOUs as a payout.

[Rusty Nayle]

[9D382a4-114dk19]

If the Chicago PMI fell off a cliff, there'd be nary a Zero Hedger questioning whether it's an outlier.

[ajkreider]

Flashing recession. Eventually Tyler will get this right.

[NoDebt]

So, what I'm supposed to believe is that the recession (within the overall depression) is over.  Got it.

[silverserfer]

there wil be no sceduled recession untill the media is told to spook the heard. After  the .01%r's halloween goatfuck party. 

[Anopheles]

And another reason why there might actually be an intrest rate increase.

[buzzsaw99]

affordable care act = not affordable and they don't care

[Bill of Rights]

What was it Chicago produces again? ( Crickets chirping )

[yogibear]

Chicago is a huge manufactuer of debt.

So is it's groomed president, Obama.

Chicago is running the country now.

[Winston Churchill]

Lots of ghetto deaths ?

[Superdave532]

Pensions I think. 

[Rainman]

Any index beginning with ' CHICONGO ' needs to be ignored.

[Haka Matohi]

And who in their right mind trusts anything that comes from Chicago?

[zeroaccountability]

"Concerns now rest with being over-inventoried as winter is predicted to be mild, purchasers said."

But...but....El Nino???

[Dead Canary]

https://s-media-cache-ak0.pinimg.com/736x/53/4b/18/534b18b5e4c755b641e00a526676219d.jpg

[ejmoosa]

Yesterday I was told that inventories falling dragged down the GDP....

I can only conclude none of these agenices know wtf they are taliking about.

[Orwell was right]

This number throws the algos off for a bit....interesting to see where they jump next

[highwaytoserfdom]

that's a lot of Iphone channel stuffing..    Hey now that Cosby on the poo poo list   Fat Albert and his internet invention and inconvenient truth trying to figure tax on cutting down trees for omitting C02....    Hey fat pant load the transaction is not taxed until sale..  Go write new NoX standards for your fascist    monopolies..

[Don Pancho]

Paul Eberhart has never been to chicago.  www.pauleberhart.com

[E.F. Mutton]

Any numbers out of Chicongo are like cheap sausages - questionable provenance at best.

[Hohum]

Like many of these statistics, there's a large margin of error.  More noise than signal.

[brown_hornet]

HEY- Illinois still has the money for lottery advertising!!!

[gaoptimize]

I strongly encourage ZH to start considering using a LogNormal distribution for data like this and report the standard deviation in both Log and unit space.

[mijev]

"Especially jobs - Chicago PMI employment: down 1.7 to 50.6"

Given that it's Chicago these are probably actual job numbers, not percentages.

[hawaiianPunch]

Corporate scam just before quarterly reporting... Chicago is a den of corruption. The bankers, accountants, and corporations can make huge leveraged "investments" and win big... because they provide the economic data. When honesty and integrity are gone, statistics are meaningless. EVERYONE - Fed, U.S. Govt., Universities, CNBC, Bloomberg, Fox Business - knows this, but they're all obediently playing their part in the charade... to do otherwise is to collapse the system. Economics is no longer about data, but about psychological manipulation. 

[Thisisbullishright]

So an event that should happen about once every BILLION years!

Totally normal.....

BTFD!

[arbwhore]

and to think inventory drawdown was the big excuse for low Q3 GDP.

[undercover brother]

There must be an unknown correlation between the PMI and the murder rate in Chicago. 

[Oldballplayer]

Grasshoppers, met the Ants.

They build up their food stores for the winter.

But what the fable doesn't tell you:  Most of the worker ants are long dead by the time it comes to eat the food.  Thats how the colony survives the winter.

Companies build up inventories.  Take the tax hit.  And then fire their staff.

So, the real morale of the story:  Both the grasshopper and most of the ants are fucked.

[zhm]

I suppose this means the markets are mad and they're going to fall.  Tyler "gartman" Durden and everyone else at ZH probably dont know that the markets just climbed 10% in a few weeks. How long can you go pretending like markets are not climbing? the moves and prices are very real.  

[TheDanimal]

"Commentary from purchasers continued to suggest the workforce can easily be expanded or contracted due to heavy reliance on temporary workers. Ongoing commentary suggests difficulty in acquiring qualified workers."

No wonder they are having trouble acquiring qualified workers, they're only going after temp workers.  Temp workers don't give a shit, I know I was one for a while. The pay is just too low and there's much less chance that working hard will pay off in the form of a raise or promotion.  It's the incentives, stupid!