Jump in PMI Indicates Expansion

The Chicago PMI came in at 50.0 for July. It registered 43.4 in July. Quite a jump and remember anything at 50 or above indicates expansion. No second derivative, we’re bleeding more slowly kind of stuff.

All of the components that are used to calculate the final number showed improvement and two — Production and new orders were also above 50. Production came in at 52.9 and new orders at 52.5. Things weren’t so rosy with the employment component, it rose to 38.7 from 35.3. It’s probably too soon to read too much into that but keep an eye on it.

It might be no more than an inventory rebuild driving these numbers, but hey, you have to start somewhere. Maybe we get some momentum out of all of this and keep rolling along. Still, with the consumer still planted firmly on the sidelines, it’s hard to get too excited.

Comments

[Dave Wrixon:]

Inventory can and usually does build on an unexpected slow down.

Aug 31 02:12 PM

[whidbey:]

The PMI is not a single point indicator; it bounces around too much to be taken too seriously.

Wait until you have three in a row over 50 and write then.

The problem is that the stimulus is not constant, non geographically uniform.

Aug 31 02:17 PM

[Steven Hansen:]

Pmi's must be used in conjunction with other indicators as they don't even meet the test of a statistical sampling.

Aug 31 11:59 PM

[Albertarocks:]

The fox is guarding the henhouse. I don't particularly care what the PMI came in at, the only thing I'm certain about is that it's been skewed to fit the agenda. Why anybody bothers paying attention to liars is beyond me.

Sep 01 07:09 PM