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Economy in Brief

Chicago Purchasing Agents' Index Down
by Tom Moeller August 31, 2004

The Chicago Purchasing Managers Business Barometer for August fell hard to 57.3. The 11.4% m/m decline reversed nearly all of the 14.7% increase in July and left the index well off the May high of 68.0. Consensus expectations had been for a lesser decline to 60.0.

During the last ten years there has been a 73% correlation between the level of the Chicago Business Barometer and the three month change in factory sector industrial output. That correlation has risen to 85% during the last five years.

The new orders index slumped to 58.0 following the July advance to 68.7 from 56.8 in June. Production gave back half of its July gain with a drop to 61.8.

Bucking the other components, the employment index rose 5.5 points to 51.1. During the last twenty years there has been an 81% correlation between the level of this employment index and the three month change in factory sector employment.

The index of prices paid surged to 86.6, the highest level since 1988.

Chicago Purchasing Managers Index, SA Aug. July Aug. '03 2003 2002 2001
Business Barometer 57.3 64.7 57.9 54.7 52.7 41.4
  New Orders 58.0 68.7 61.8 58.0 56.2 42.3
Prices Paid 86.6 77.6 51.7 55.8 56.9 50.4
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