The Sept Chicago PMI was much weaker than expected and back below 50 at 46.1. Expectations were 52 vs 50 in Aug. Maybe call it the Clunker hangover as New Orders fell 6 points to 46.3, a 3 month low and Order Backlogs fell 9 points to 36.7. Employment was little changed at 38.8. Inventories got a lift, rising 11.4 points to 38.9 and it’s the highest since Nov ’08 likely following an increase in auto production where plants went back online in July. Bottom line, manufacturing will be a key contributor to the Q3 GDP rebound with the question always being sustainability but with final demand still sluggish, there is only so much of an improvement that we will see and today’s number highlights that risk. The national ISM is out tomorrow which will reconcile all the regional surveys and will include an Export component which today’s Chicago figure did not have and has been a source of stability.
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