Chicago PMI Misses As Survey Respondents Warn Oil Price Shock "Tipping Point Fast Approaching"

Tyler Durden's picture

As expected, the latest economic data point, ahead of what we now believe will be an NFP miss, the Chicago March PMI, has come and gone and it was merely the latest in a long series of misses. While the headline disappointment was modest, printing at 62.2, below expectations of 63.0 and down from 64.0, it was at the subcomponents that the pain was most acute: New Orders dropped from 69.2 to 63.3, Prices Paid soared from 65.6 to 70.1, the highest since August, any growth focusing again on inventory build up - hence hollow - from 49.6 to 57.4, the largest gain since December 2010 as the restocking continues furiously in what appears forever, but most importantly, the Employment Index which slid from 64.2 to 56.3, the biggest drop since February 2009, and virtually all job gains in 2012 have now been given up. Yet the biggest caution was not anywhere in the indices, but in one of the survey responses: "Tipping point for oil pricing and impact on raw materials and Total Cost of Operations (TCO) is fast approaching." Once the tipping point for oil comes and passes, that's the ballgame, and the only option for the Fed will be to create another Lehman-like deflationary collapse.

PMI Employment Index:

And discrete responses:

  1. The last few weeks our orders are up compared to previous months, hope this is a good sign for months to come.
  2. We have a big issue as related to available capacity in the foundries. The availability of trained machinists is still a serious issue.
  3. Our business isn't bad but we are not booming.
  4. Real estate lending remains weak. C&I lending beginning to improve but is very competitive. Small businesses remain weak.
  5. High oil prices are having a negative impact on most chemicals and on freight costs. Major commodities are costing more because of higher fuel prices.
  6. Some key suppliers are quoting shorter lead times because of their decreasing backlogs.
  7. New orders were very light this month but our backlog may have discouraged some of those looking for short lead times.
  8. Tipping point for oil pricing and impact on raw materials and Total Cost of Operations (TCO) is fast approaching.
  9. Aluminum lead times have jumped.

Full report link.

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GeneMarchbanks's picture

Wave the wand! Drop the price Blammey!!

AN0NYM0US's picture

no no no

Bloomberg told me this morning that the  American consumer has adjusted their lifestyle to accommodate $4 gas by moving closer to their workplace and buying energy efficient cars and Bloomberg also told me that what American's saved on heating costs this mild winter will offset higher gas prices.

Village Smithy's picture

The pain endured once or twice every week filling up will soon eclipse any memory of the light winter. It already has for me at least.

LowProfile's picture

Put your OT threadjacks in the response box at the bottom.  People have enough to read here already.  Better yet, send it to Tyler as a possible article.

Putting it so it stands out at the top is dickish and gets you on "The List" (congrats).

DorseyCecil68669's picture

my friend's aunt makes $72/hr on the internet. She has been without work for six months but last month her payment was $19183 just working on the internet for a few hours. Here's the site to read more .....

TruthInSunshine's picture

Bernanke & The Gang of Thieves, fronting for the Crony Capitalists (aka Socialists), who have a heavy concentration in the banking sector and on Wall Street, will just keep pumping liquidity (from 8.7 trillion of 'electronic credits' so far), and they will be Heroes again, if even for one day, before the shit collapses.

After all, there are no trade-offs to blowing what quite possibly could be the largest simultaneous bubbles in equities AND bonds (neat trick that is...), as the prices of everything from gasoline (and anything oil-derived, which is most things) to food explodes higher, because everyone knows that producers can merely keep raising their prices and consumers can keep buying the same real or even greater amounts of output at said higher prices (with stagnating or falling real wages and massive structural unemployment/underemployment coupled with unsustainable sovereign deficit spending), and that demand destruction is all a big myth. /sarc

As The Atlantic and Time Magazine have rightfully opined, The Bernank is a true Hero who has saved the economy by temporarily inflating massive bubbles, ala kick the can, in equity and bond markets, at the cost of poundng producers and consumers into deleveraging oblivion.

Ben Bernank Blows Big Bubbles. Brilliant!

Let's see what awaits the world now that the foreclosure pipeline is unfrozen (just got off the phone with someone in the major league know 3 minutes ago on this subject) and now that Europe and PIIGS are unsaved once again.

Hedgetard55's picture

But we are an obese nation, so higher prices are actually good, they mean we will consume less, lose weight, and save Obamacare $ in the future.

Cdad's picture

Well, if weight loss via higher prices is your thing, then the CME is doing your bidding on soybeans.  Just check that front running chart on those beans this morning.

MeelionDollerBogus's picture

most interesting, always good to have a perspective reminder.$SOYB&p=D&yr=2&mn=11&dy=0&id=p69732681014$SOYB&p=D&yr=0&mn=5&dy=0&id=p69732681014

Citxmech's picture

You mean money I don't spend isn't "income?"

walküre's picture

Bloomberg takes the cake for stupidity. What choice is there? Stay home and stop working because Americans can't afford to commute in their old cars anymore? People have to work. I know, its shocking! The ivory tower idiots have a real hard time comprehending that main street Americans HAVE TO ADAPT or they will simply DIE. But how is that in any way shape or form POSITIVE or BULLISH?

BobPaulson's picture

I think the reality is that a lot of driving is descretionary. That goes first. The people who cannot will be the people who are at the low end of the income curve who live in the country. They're going to have to start organizing their trips to town with friends, cut the soccer practices, buy bootleg gas, etc.  I don't know about in the US but in Canada the farmers get untaxed gas they are only supposed to use for their farming equipment - it has a dye in it so you know if it has been used in a non-farm engine. There won't be enough cops to reign in the use of this fuel for carpooling soccer moms to Wal-Mart in town, IMO.

IrritableBowels's picture

MT has dyed diesel, but I'm not aware of dyed gas.

BobPaulson's picture

Sorry, that's what I meant. So it is only for people who have diesel trucks - which includes a lot of folks living in rural settings.


El's picture

I think anyone who is prudent would start thinking twice about taking those long afternoon Sunday drives, whether they can afford to do it or not. The key, as I understand it, is to live beneath your means. That being said, I tend to think discretionary driving for the lower income bracket fell out the window during the last run up of gas prices. I could be mistaken, but seems to me that people never went back to driving the way they did before.

MeelionDollerBogus's picture

Live off grid in the stix?

Emigrate? Smuggle yourself out of the country?

You only "gotta work" if someone's got a job for you. Otherwise you gotta eat & work won't be part of it.

Bicycle Repairman's picture

In my area back in 2008 a lot of SUVs disappeared and were replaced by Priuses.  And it happened fairly quickly.  What now?  What can Priuses be replaced with?  Europe has cars with 50+ mpg, but the USA doesn't.

Moving closer to their workplace?  Not if you have kids.  Not if you have an underwater house.  Not if the job is in the city and that housing is too expensive.

Greater than $4 a gallon gas = total economic shutdown, and a change in Presidents. Rapidemente.

Saudi Arabia had better start pumping to offset QE3, or something hits the fan.

Bicycle Repairman's picture

OK, I am seeing more scooters and bicycles.

BobPaulson's picture

Not very helpful on icy roads or for transporting groceries.

Bicycle Repairman's picture

I'm not saying it is a good thing or a bad thing.  I'll let individuals decide what they need.  I'll agree that these modes of transportation will work for a small minority of Americans only, and will not solve this nation's energy problems.

BobPaulson's picture

Good point. It is a symptom of the problem, not a solution.

trip kitchen's picture

My bicycles have little 4 stroke engines on them.  Allows me to cruise at 28-30 MPH, and not be worn out when get somewhere.

Nice for my bad knee too.

duo's picture

150cc scooters can do 80 MPH and get about 75 MPG in town.  Yes, they suck in the rain, but if the weather is good I can commute for a whole week an a gallon of gas.

Chuck Walla's picture

What can Priuses be replaced with? 


Schwinn, Trek, Giant, or any moped. Comradette Michelle wants us to be healthy afterall.

Bullish walking shoes!

Doubleguns's picture

Yep found a bridge much closer to work to live under.

SheepDog-One's picture

Pretty soon the 'american consumer' will have adjusted to higher prices and bankruptcy by moving into a tent.

MeelionDollerBogus's picture

Thanks to Occupy Wall street bringing up how people will be living in tents, by living in tents, that soon will be illegal. I guess you'll see all homeless shoved into prisons then so that the industrial prison complex can profit until everyone is a prisoner, a cop, a banker or emigrated.

rosiescenario's picture

Yeah it was so easy to sell my home and buy another closer to work, what with the high demand for homes. And that Hummer I had, also sold quickly so I could buy a new know, the car with 0 emissions because the electricity for it comes from a nuclear power plant.


Bloomberg has managed to become the print version of CNBC....I see them over and over having some sort of positive bs headline to an article that in fact is very negative. The WSJ is running a close second in the puffery race.


Now I get to experience what the Russians were reading during the Cold War when they opened Pravda.

espirit's picture

As if one free issue of the Bloomturd rag and Forbes wasn't enough, they send two identical per week to the local landfill.  The WSJ finally gave up after two years when I gave them a flat "no" to an active subscription.

Free propaganda shows how desperate they are.

transaccountin's picture

But the consumer CONfidence number was super, damnit! Who doesnt feel great with $4.18 gas. I mean its not like they are polling only Obama's staff or anything.

rosiescenario's picture

$5 gas where I live is just a leading indicator of the consumers' are food prices. Since the consumers is able to pay these prices, the job market and wage rates must be really moving higher.

Bicycle Repairman's picture

Americans drive too much anyway.

gaoptimize's picture

How is business?  I'm bullish on your sector.

A  couple things we need from you:

1) Bicycle powered well/water pumps, mechanical and 240 volts

2) Bicycle powered log splitter

Are battery powered electric bicycles good to go 50 miles at up to 50 MPH?  That is what I need for my commute.

Bicycle Repairman's picture

Business is good.  I'm not sure there is a market for product (1).  for product (2) are you envisioning a system that substitutes work for force?  The electric bicycle you envision may never exist.  As of now most cyclists insist on powering themselves.

Unless USA radically re-aligns the way it lives, the upside for bicycle transport is limited.  And the USA cannot afford to re-align the way it lives.

gaoptimize's picture

(2) Yes, something that would raise a wedge against gravity and release at top (with hand brake safety release maybe), or would operate a jack somehow (pneumatic perhaps).

There will be a market for (1) as the electrical infrastructure crumbles.  People will get sick and tired pretty quickly of pulling up their well bullet buckets.

Citxmech's picture

The USA cannot afford NOT to realign the way it lives.

MeelionDollerBogus's picture

Can't afford NOT to re-align. Be it trains & buses that carry bikes or more subways and buses that fill in cities. Cities will otherwise wither and collapse under their own heavy cost of waste disposal, water treatment & attempting to get more food than they could hope to produce - for what work they do is not in any way helping those who produce food.

espirit's picture

Much easier is a Stratified Downdraft Gasifier.  Instead of wood chips to power your vehicle, a plentiful (and useless) fiat will work just as well.

Google, YouTube, etc.

walküre's picture

That's a huge drop. Is it the private or the public sector that suddenly stopped driving? This is only gasoline sales, not even considering fuel sales. I wonder who has an explanation for that and how they want to spin this as recovery?

According to the data we're worse off than in 2008, much worse.

Jason T's picture

goes back to 1984 levels.  

this is chart of finished motor gasoline supplied .. not as dramatic as the other  but still down big this year over last.

walküre's picture

'09, '10 and '11 were pretty consistent in February for example.

we're now almost 10% off the highs when we're supposedly in a "recovery".

Element's picture

Looks like the next up-cycle peak ... was inverted.