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Chicago PMI Refuses To Bounce After July Plunge

Courtesy of ZeroHedge. View original post here.

Following Chicago PMI's collapse in July, August failed to provde any bounce in the soft survey data, printing unchanged at 58.9 (July was revised slightly higher).

While marking the eighteenth consecutive above-50 reading, this month's unchanged result follows July's sharp decline that snapped a run of five straight monthly increases in business optimism.

Only 2 components managed any improvement in August (production and new orders) with both employment and inventories weak:

  • Inventories fell and the direction reversed, signaling contraction
  • Employment fell and the direction reversed, signaling contraction

The Employment indicator slipped for the third consecutive month in August, to enter the sub-50 zone for the first time since March. Even though the indicator has performed materially better since the turn of the year, having spent eight months of last year below the neutral-50 mark and averaging 49.2 in the first eight months of last year compared with 52.5 in the same period this year, the continuous slide in the indicator raises concerns about the adequacy of well qualified, trained workers.

And some further details from the MNI report:

While marking the eighteenth consecutive above-50 reading, this month's unchanged result follows July's sharp decline that snapped a run of five straight monthly increases in business optimism. Apart from Employment, all other components of the Barometer were above their respective levels seen last August and all of them were above their January levels, pointing to robust confidence among US firms.

The stability in sentiment was the result of gains in production and demand being offset by losses in backlogs, employment and supplier deliveries. Both New Orders and Production increased slightly, following hefty falls last month. Firms also saw the level of backlogs fall in August.

The Order Backlogs indicator fell for the second consecutive month having previously set a 23-year high in June. Suppliers took slightly less time to deliver key inputs, with the respective indicator at 59.3, falling for the second consecutive month to hit a four-month low.

Companies saw stock levels fall significantly in August. Some companies reported that they could not satisfy odd requests or huge orders in a timely fashion due to limited inventory. The Inventories indicator fell by 6.4 points to dive into contractionary territory, hitting the lowest level since the start of the year.

The Employment indicator slipped for the third consecutive month in August, to enter the sub-50 zone for the first time since March. Even though the indicator has performed materially better since the turn of the year, having spent eight months of last year below the neutral-50 mark and averaging 49.2 in the first eight months of last year compared with 52.5 in the same period this year, the continuous slide in the indicator raises concerns about the adequacy of well qualified, trained workers.


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