–Retransmitting Story Published 10:30 ET Thursday

By Kasra Kangarloo

WASHINGTON (MNI) – The June Chicago purchasing managers’ index is
expected to fall to 56 from 59.1 in May, according to a survey of
economists by Market News International.

The index will show continued expansion in Chicago’s manufacturing
sector if expectations are met, although at a slower pace than the
previous month. When business activity is expanding, the index is above
50; when activity is contracting, the index is below 50.

The Chicago PMI has fallen steadily over the past three months, led
by losses in the “prices paid,” “new orders” and “inventories” indexes.
The production index offset losses in the May report, rising from 61 to
64.2.

The most recent surveys of business activity conducted by other
regional banks have revealed a decline in manufacturing that matches
expectations for the Chicago index. The Philadelphia regional
manufacturing index showed a decline in the expansion of productivity,
with new orders, prices paid and shipments indexes falling in July. New
York, Richmond and Dallas survey also showed a milder expansion in
productivity.

David Resler, chief U.S. economist at Nomura, said that based on
other reports “the manufacturing sector is moving to a more moderate
trajectory, though still growing.”

According to Brian Fabbri, chief U.S. economist at BNP Paribas, the
U.S. durable goods report offers a source of strength for Chicago
manufacturing because it shows an increase in automobile orders, which
are integral to the region’s manufacturing sector.

“The Chicago area has a pretty heavy automobile sector, which
includes all the subcontractors and other businesses dependent on the
industry.” he said.

The Commerce Department’s durable goods report showed a 2.9%
increase in automobile shipments in June and a 2.5% increase in new
orders.

The Chicago PMI report, known as the ISM Chicago Business Survey,
is scheduled to be made public at 9:45 ET Friday. Its results are sold
to subscribing market participants by Kingsbury International, the
firm that compiles the ISM survey, for release to them three minutes
prior to publication.

–Kasra Kangarloo is a reporter for Need to Know News in Washington

** Market News International Washington Bureau: 202-371-2121 **

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