Global| Nov 28 2008Chicago Purchasing Managers' Barometer Off Sharply
by:Tom Moeller
|in:Economy in Brief
Summary
The Chicago Purchasing Manager's Association indicated that its November business barometer fell to 33.8 after the collapse during October. The latest figure was the lowest since early during the sharp recession of 1982. Consensus [...]
The Chicago Purchasing Manager's Association indicated that its November business barometer fell to 33.8 after the collapse during October. The latest figure was the lowest since early during the sharp recession of 1982. Consensus expectations had been for a reading of 37.3.
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 new orders sub-index fell to 27.2, the lowest since 1980, and the index level is off by roughly one-half during just the last two months. Order backlogs also fell sharply. The production series ticked slightly after having more-than halved during October.
The employment index, at 33.4, was near its lowest level since the last recession. During the last thirty years there has been a 72% correlation between the level of the employment index and the three-month change in nonfarm payrolls. 1
The prices paid index fell further after having declined sharply during October. The current index level of 50.7 is nearly half the July high. During the last ten years there has been a 55% correlation between the price index and the three-month change in the finished goods PPI.
The Mortgage Meltdown, Financial Markets, and the Economy from the Federal Reserve Bank of San Francisco can be found here.
| Chicago PMI | November | October | September | November '07 | 2007 | 2006 | 2005 |
|---|---|---|---|---|---|---|---|
| Chicago PMI Business Barometer Index | 33.8 | 37.8 | 56.7 | 53.6 | 54.4 | 56.8 | 60.4 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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