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Chicago PMI Bounce Stalls, "Firms At Risk Of Being Over-Inventoried"

Following this morning's ISM Milwaukee disappointment, missing for the 8th month sof the last 9 (printing 47.67 vs 50.00 exp and hovering at 2 year lows) with production and prices plunging, Chicago PMI just printed a slightly disappointing 54.4 (against expectations of 54.5). After last month's surprise bounce, this slowdown suggests there is little to no momentum in any 'recovery' stemming from a Q2 bounce. Weakness under the surface is broad and as purchasers warned "failure of New Orders to materialize "within the next few weeks" could put firms at risk of being over-inventoried and curtail producton levels." Perhaps most worrying though is the 4th consecutive contraction in employment... but the recovery?

 

Production and Prices plunged holding Milwaukee's ISM near 2-year lows...

 

But then Chicago PMI hit...

 

And underlying factors were weak...

  • MNI CHICAGO REPORT: BAROMETER 54.4 AUG VS 54.7 JUL SEASADJ
  • MNI CHICAGO: SUPPLIER DELIVERIES RISE TO HIGHEST SINCE MARCH
  • MNI CHICAGO: EMPLOYMENT UP BUT IN CONTRACTION FOR 4TH MONTH
  • MNI CHICAGO: PRICES PAID FALL BACK BELOW 50
  • MNI CHICAGO: INVENTORIES COMPONENT HIGHEST SINCE NOV 2014
  • MNI CHICAGO: ORDER BACKLOGS CONTRACT AT FASTER RATE
  • MNI CHICAGO: PRODUCTION AND NEW ORDERS EASE SLIGHTLY

Some purchasers reported enough work to keep their facilities "busy" but said that there were a lot of small orders with large orders lacking.

Judging by the market's response - it appears bad news is now bad news.

 

Charts: Bloomberg