Chicago PMI disappoints

The Mar Chicago PMI manufacturing index was 58.8, about 2 pts below estimates and down from 62.6 in Feb which was the highest since April ’05. It is still the 3rd highest reading dating back to mid ’07 but it follows the weaker than expected ADP report and with the market a straight line over the past month, there is little tolerance for below forecasted data. New Orders fell a touch to 61.8 from 62.2 but it is the lowest since Oct ’09. Backlogs fell 4.2 pts but just gives back the Feb spike. The Employment component was about unchanged at 53.1. Prices Paid fell 1 pt to 66.6 but is 7 pts above the 1 yr average. The big change within the data was the 10 pt jump in Inventories which rose above 50 for the first time since Oct ’08. This component will statistically lift GDP if its followed in other regions and hopefully it was built to meet existing demand rather than in the hopes of a pick up in demand that may or may not come. The ISM is out tomorrow.

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