·
The Chicago Purchasing Managers Business
Barometer was 61.7 for November, down slightly from October's 62.7, but
firmer than forecasts of about 60.0. This was the third straight reading
above 60, a favorable performance after about six months of saw tooth
behavior.
· The new orders index, however, kept up the seesaw pattern, as it fell back 11.0 points to 61.6 after October's 9.2-point increase; the October advance, notably, was corroborated in yesterday's report of a 3.4% surge in the value of national durable goods orders in October. The Chicago production index eased 4.5 points, partially reversing its October gain. Employment fell by a point to 50.3, indicating a marginal expansion of factory jobs in the Chicago region.
· While the components describing real
manufacturing activity portray a fairly optimistic picture, the index of
prices paid may cause some worry. It rose once again, reaching
94.1, the highest since August 1979, when inflation in general was
pretty rapid. This comparison, however, calls our attention to an
important distinction in the Chicago and other Purchasing Manager
surveys: these surveys count the number of firms reporting moves
in a specific direction, not the magnitude of the move. Thus, many
firms paid higher prices and fewer firms paid lower prices, but we have
no idea how much those prices changed. Also note that the run-up
in the overall index in fact resulted partially from a reduction in the
number of firms paying lower prices, from 6% to 3%; as recently as
August, this deflationary factor was 11% and 16% in May. The
number of firms paying higher prices represents 67% of the total, a high
figure, but not so dramatic as in earlier inflation periods and not even
as high as several readings last year in the mid-70s.