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Chicago PMI Falls To 60.5 In September From 64.3 In August

By Kitco News
Tuesday September 30, 2014 9:45 AM

Editor's Note: Updated to add additional information

(Kitco News) - The headline index for the Chicago Business Barometer, widely known as the Chicago Purchasing Managers Index, dropped by 3.8 points in September to a reading of 60.5.

In August, the index was 64.3. Despite the fall, the index reading of 60.5 is still considered “robust,” the Institute for Supply Management said.

Consensus estimates compiled by various news organizations called for the September headline index to come in between 59 to 65. The Chicago report tends to be watched closely as a sign of strength in the Midwestern manufacturing sector and as a possible precursor to the Institute for Supply Management’s PMI for the entire nation, which comes out one business day later and is scheduled for release on Wednesday.

Readings above 50 in such diffusion indexes are seen as a sign of economic growth, and vice-versa. The farther an indicator is above or below 50, the greater or smaller the rate of change.

Production and new orders slowed, and firms reported a record rise in stocks and a sharp increase in input prices, the Chicago ISM said.

“There was a surprisingly sharp increase in stocks with firms adding inventories of finished goods at the fastest pace since February 1973. Feedback suggested firms were preparing for robust sales forecasts and potential spikes in unplanned orders,” they said.

Despite the drop from August’s figure, Chicago ISM said survey respondents said activity levels were “strong” and “surging,” aided by ongoing demand, sales promotions and organic growth.

”Activity levels remained buoyant in September and point to continued firm economic growth. Moreover, the record pace of stock-building suggests firms are increasingly confident that things will keep improving,“ said Philip Uglow, chief economist of MNI Indicators.

Although production and new orders slowed, they remained firm around 60. The order backlogs stood above 50 for the second consecutive month. The report cited “a number of respondents” who said the slight slowdown in September is likely to be temporary “as businesses reported strong bookings through the end of October.”

By Debbie Carlson dcarlson@kitco.com
Follow me on Twitter @dcarlsonkitco



Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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