ECON: Chicago PMI Slightly Weaker Than Expected
- PMI 52.3 vs 54.0 forecast, 51.6 previously
- New Orders 53.9 vs 54.6 previously
- Employment Index 56.6 vs 57.8 previously
- Market Reaction: MBS liquidity starting to come back in Fannie 4.0s, now well off their lows of 103-06 and up to 103-11. 10's are down to 2.677 from 2.705 highs. Waiting on FOMC at 2pm now.
The Chicago Business Barometer increased to 52.3 in July from 51.6 in June, led by gains in Order Backlogs and Supplier Deliveries, more than offsetting a second consecutive monthly decline in both Production and New Orders.
While still in contraction, Order Backlogs rose in July following a record plunge in June but remain below the average seen over the past year. Supplier delivery times moved back above 50 in July having fallen to a four year low in June.
The remaining three Business Activity measures which make up the Barometer fell between June and July. Production and New Orders declined to the lowest since April, while Employment eased slightly, but remained above the long-run average.
Inventories continued to contract and were at their lowest since November 2009. Prices Paid rose for the third consecutive month to the highest since late 2012.
Commenting on the MNI Chicago Report, Philip Uglow, Chief Economist at MNI Indicators said: “While the Chicago Business Barometer ticked higher in July, declines in both Production and New Orders show just how challenging the business environment is.”