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 [4], 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...
[5]
But then Chicago PMI hit...
[6]
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.
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Judging by the market's response - it appears bad news is now bad news.
Charts: Bloomberg
