The Chicago Purchasing Manager's Assn. reported that its January business barometer fell to 48.8. It was the first month the diffusion index of factory sector activity fell below the break even line of 50 since 2003.

During the last ten years there has been a 69% correlation between the index and the three month change in US factory sector industrial production.

Lower new orders and weaker employment accounted for much of the weakening while production was up.

The prices paid index dropped to to the lowest level since late 2003.During the last ten years there has been an 89% correlation between the level of the prices diffusion index and the three month change in the core PPI for intermediate good.

The latest statement from the Federal Reserve Board can be found here.