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Economy in Brief

Chicago Purchasing Managers' Barometer Dipped
by Tom Moeller September 30, 2008

For September, the Chicago Purchasing Manager's Association reported that its business barometer dipped. However, the 2.1% decline in the index to 56.7 reversed only a small part of its 14.0% m/m jump during August. Consensus expectations had been for a larger decline to a level of 53.0.

During the last ten years there has been a 67% correlation between the business barometer 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 largest decline came from the inventory sub-series. New orders and order backlogs also fell sharply. The production series reversed some of its recent gain but the employment index rose sharply to its highest level since March.

The prices paid index was roughly unchanged near its lowest level this year. 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.

House Prices and the Stance of Monetary Policy from the Federal Reserve Bank of St. Louis is available here.

Chicago PMI  September   August September '07 2007 2006 2005
Chicago PMI Business Barometer Index 56.7 57.9 53.2 54.4 56.8 60.4
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