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Economy in Brief

Chicago Purchasing Managers' Barometer Slightly Improved
by Tom Moeller June 30, 2008

The Chicago Purchasing Manager's Association reported that its June business barometer improved, for the fifth straight month, to a still low level of 49.6 from 49.1 in May. Consensus expectations had been for weaker reading of 48.0.

During the last ten years there has been a 67% correlation between the index and the three-month change in US factory sector industrial production. There has been an 85% correlation between the Chicago figure and the national ISM index (due for release tomorrow) and that is the highest correlation of all the regional series with the national ISM index.

The components of the overall index had varying performance. To the upside was the employment index which rose to 46.7, the highest level since January. Also up were the inventories and vendor deliveries components.

To the downside was the production component to the lowest level since early 2002. Also down slightly were the new orders and the orders backlog components.

The prices paid index dipped slightly 85.5 which was still near the recent highs. During the last ten years there has been a 48% correlation between the price index and the three-month change in the finished goods PPI.

Last week's speech titled Global Economic Integration and Decoupling by Federal Reserve Vice Chairman Donald L. Kohn can be found here.

The minutes to the Fed meetings held on March 14 and 16, regarding Bear Stearns, are available here and here.

Chicago PMI  June   May June '07 2007 2006 2005
Chicago PMI Business Barometer Index 49.6 49.1 58.7 54.4 56.8 60.4
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