The Chicago Purchasing Manager’s Index (PMI) modestly accelerated in November, according to the Institute for Supply Management on Friday. The index, a barometer of business activity in the Chicago region, rose to 50.4, following two straight months of contraction, including a reading of 49.9 in October. Readings above 50 indicate expansion in business activity.
The index was only slightly lower than a consensus of economist expectations of a 50.5 reading.
Production increased to 54.7 from 51.8 the month prior and employment rose 4.9 points to 55.2. Deliveries from suppliers also helped the index move back into expansion mode with a nearly 7-point increase to 57.3.
Counterbalancing the gains, new orders dropped to their lowest levels since 2009 with a 5.3-point move down to 45.3. Inventories contracted to 47.1, the lowest level since February 2010. The decrease is new orders is disconcerting as it is the second consecutive month of contraction and could be pointing to a soft start to 2013.
General comments from survey panelists included in the report contained mixed sentiment from unsustainable upward movements because of a slowing economy to strong demand resulting in some machine orders that will have to be pushed into next year.
The broad markets appear to be largely ignoring the narrow miss of expectations or the softening of new orders. About one hour into Friday’s trading session, the Dow is ahead by 23 points, the S&P 500 is up 1 point and the Nasdaq has slipped 2 points into the red as tech stocks are lagging with Zynga (ZNGA) and Groupon (GRPN) acting as anchors by tracking about 6 percent lower each.
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