We already reported that today’s Chicago PMI data was week, but we wanted to circle back to it and spotlight some of the datapoints from it.
First of all: What is the Chicago PMI? It’s a survey of Purchasing Managers at corporations, who are asked their take on the economy: How orders are doing, what they’re doing with employment, what they’re seeing with commodity costs, and so forth.
You can see by these tables (which you can download here) how much of a dropoff there was in activity in various categories.
Note in particular the collapse in New Orders and Employment and the jump-up in production costs (prices paid).
So that report, sadly, screams stagflation.
Also fascinating are the anecdotal comments about the economy.
Survey respondents had a lot to say about uncertainty and rising commodity costs.
- It seems that companies are starting to move forward again. Projects that have been on hold are again being discussed.
- Packaging prices are steady with some pressure or suggestions of increase without real merit. Chemical prices are increasing due to oil and corn in the case of ethanol.
- Copper moved higher quickly.
- Market place still seems unsettled. One automotive customer’s projections for huge growth this year fizzled out during the 3rd quarter, yet another automotive customer’s demands have shown healthy increases.
- Suppliers seem to be slower than ever with their orders, there seems to be no knowledge or creativity anymore if it isn’t on the computer they can’t do it.
- 2012 drought, election year, recent change in Gulf weather all play into short term and long term prices of materials.
- Overall uncertainty with respect to government policies continues to make us hesitant to make significant investments in new areas.
- Uncertainty about taxes, regulations, and public policy going into 2013 is causing spending decisions to be deferred or constrained until the picture is clearer.
- Another month of lower order intake.
Again, this is just one report.
There have been other reports lately (Dallas Fed, Philly Fed, etc.) that show the opposite, that manufacturing is firming.
But the bottom line is that there’s a maelstrom of 2013 uncertainty, higher commodity costs, and weak export orders that are slamming the economy. Hopefully the Chicago PMI report from today was just a blip.
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