Although the headline reading was weaker than expected (52.3 vs. 54.0), the Chicago PMI index for July rose relative to last month's reading of 51.6. As shown in the table below, though, just three (Backlog, Supplier Deliveries, and Prices Paid) of the indicator's seven subsectors increased this month, while Production, New Orders, Inventory, and Employment all declined.
Relative to last year, the internals were even worse, as five out of seven subcomponents declined. While today's reading does not bode particularly well for tomorrow's ISM Manufacturing report, we would note that the headline reading has been increasingly volatile in the last few months. And, most of the other regional Fed reports that we have seen over the last two weeks showed growth and came in ahead of expectations.