October 29, 2010

Chicago PMI Increases in October

Monthly survey of purchasing managers reports good news

The Chicago PMI, a monthly measure of the business conditions based on surveys of purchasing managers across Illinois, Indiana and Michigan, increased for the month of October.

According to Econoday, which releases a monthly economic calendar, Chicago purchasers report strong, broad-based, month-to-month acceleration this month. The Chicago index for October rose two tenths to 60.6, well above the break-even level of 50. New orders are especially strong, at 65.0 for a more than three point rise. Employment is also strong, up more than one point to 54.6 and reflecting robust production which jumped 5.5 points to 69.8. Delivery times slowed, input prices rose, and businesses in Chicago added to inventories -- all consistent with deep strength. This report points to solid plus 50 readings for next week's national purchasing reports from the Institute for Supply Management.

Econoday reports that the Chicago PMI in September jumped to 60.4 from 56.7 in August (breakeven of 50). The higher index number reflected accelerating growth in the economy, at least for businesses in the Chicago area. And we are likely to get another healthy number in October as the September new orders index spiked more than six points to a very strong 61.4.

The Institute of Supply Management in Chicago compiles a survey and a composite diffusion index of business conditions in the Chicago area. The survey is conducted by Kingsbury International, LTD. Manufacturing and non-manufacturing firms are both surveyed. Hence, it is not directly comparable to pure manufacturing surveys. Readings above 50 percent indicate an expanding business sector.

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