Encompassing the late Feb spike in oil prices and the Japanese earthquake, the March Chicago mfr’g PMI was still better than expected at 70.6 vs the estimate of 69.9, though down a touch from Feb when it hit 71.2. New Orders fell slightly but Backlogs rose by 8 pts to the highest since 1974 and the Employment component saw an almost 6 pt jump to the best since 1983. Inventories were little changed. Inflation pressures were evident again as Prices Paid rose 2.2 pts to 83.4, the highest since July ’08. Some of the company comments given in the release were certainly positive on the economy but with the caveats of “commodity inflation hurting profits” and there is “a lot of skittishness up and down the supply chain concerning the effects of fallout from Japan.” We will hear more specifics on these two key issues when earnings season starts a week from Monday. Tomorrow’s ISM will reconcile the regional surveys where the NY and Philly #’s were good but Dallas and Richmond came in below expectations.
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