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April 2013 Chicago ISM

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While some will see today’s release as “signal” and the start of another springtime swoon in the economy (and stock market), we think it’s more “noise” than signal.

While a reported decline in employment and order backlogs did help pull the overall index lower, new orders remain solid and continue at their 6 month trend (yellow line below). New orders are the lifeblood of the manufacturing process and as long as they remain firm, the economic expansion is not at serious risk.

What really weighed on the overall index, however, were the sharp declines in prices paid and reported supplier delivery pressures (the latter is very volatile month-to-month, by the way). Lower prices and less supply chain pressures (along with under-control inventory levels as are also reflected in the table) are conditions that foster the longevity of a business expansion, not trigger its conclusion.

April 30 (Bloomberg) — Following is a summary of business activity as reported by the MNI Chicago Report.
The Bloomberg median estimate from 51 economists was 52.5.