Chicago PMI at 22-Year High

Remember that Double Dip that was supposed to happen? Me neither.

A gauge of Chicago manufacturing rose to a 22-year high in February, raising hopes for a national indicator due out Tuesday.

The Chicago business barometer, which also is called the Chicago PMI, rose to 71.2 from 68.8 in January, a reading well above the 67.7 forecast by economists. The reading fell just below the 71.5 hit in July 1988.

The big jump was led by a rise in production, and new orders also rose, though employment eased slightly from its high in January, to 59.8.

Any reading above 50 indicates expansion.

The production subcomponent rose for the sixth straight month, up to 78.2 from 73.7.

New orders edged up to 75.9 from 75.7, marking the highest level in 28 years.

Employment slipped to 59.8 from 64.1 in January, which was a 27-year high.

Prices paid fell slightly to 81.2 from 81.7. Prices paid readings in purchasing managers surveys typically reflect commodity prices, which have been surging.

One respondent to the survey worried about the rising prices at a time of strong demand.

“Costs continue to escalate. Tight inventories still slowing down supplier response and stretching out lead-times. Sales are robust causing challenging inventory balancing act when combined with the aforementioned lead-time issue,” the respondent said.

Another pointed to the rising wage disparities. “Hiring is targeted to rock stars who make much much more than previously eliminated managers,” the respondent said.

Posted by on February 28th, 2011 at 11:26 am

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