In sharp contrast to the NY, Philly and Dallas Fed surveys, the Chicago PMI at 61.1 was well above expectations of 54 and up from 56.6 in May but down from 67.6 in April. It joins the Richmond survey in bucking weakness in other regions. Because of the large auto sector influence of the Midwest, it’s possible that the Japanese auto supply chain recovery, as seen in the Japanese May IP data yesterday, helped sentiment. New Orders rose to 61.2 after falling almost 13 pts in June but at 61.2 it is the 2nd lowest since Aug ’10. Backlogs did fall below 50 for the 1st time since Sept ’10. Inventories plunged to 46.9 from 61.6 and likely reflects the influence of Japan. Production rebounded by 11 pts after a 14 pt drop in April. Employment fell 2.1 pts to 58.7, the weakest since Nov ’10. Prices Paid fell 8 pts to the lowest since Nov ’10. Bottom line, as mentioned, Japan slowing coming back likely resulted in the bounce back in the Chicago PMI. With all the mixed readings around the country, tomorrow’s national ISM will reconcile all and will be the most important data point of the week as we shift our focus back to the economy after all the Greek drama this week. Peter Boockvar
