Following weak regional surveys in NY, Philly, Richmond and Dallas, the July Chicago PMI at 58.8 was slightly below expectations of 60.0, down from 61.1 in June and is the 2nd lowest figure since last Aug. New Orders fell almost 2 pts to 59.4 and compares with the 6 month avg of 65.1. Backlogs though did rise by 6.4 pts to a 3 month high and got back above 50 at 55.7. Employment was a big disappointment, falling 7.2 pts to 51.5, the weakest since Dec ’09. Inventories rose to 53.2 from 46.9 but remain below the 6 month avg. Prices Paid rose slightly to 71.7 and while off its recent highs of 83.4, it remains above the long term avg. Today’s weaker data point follows a surprise upside to last months Chicago PMI that led to a better ISM. That respite in June looks like it won’t last as every region we’ve seen for July has now seen moderation in mfr’g and that will likely be confirmed when the national ISM merges all the data together for release on Monday. It is this growing reality of slowing economic growth that has superseded the debt ceiling talks in influencing market behavior. With this said, there is little question that when a deal does happen, stocks will knee jerk bounce but I question the extent of it.

The final July UoM confidence figure confirmed the preliminary report, coming in at the lowest level since March 2009 at 63.7, down 7.8 pts from June. Both Current Conditions and the Economic Outlook fell by similar amounts from June. Inflation expectations at 3.4% were unchanged with the preliminary report but down from 3.8% in June and the lowest since Feb. Bottom line, the data speaks for itself.

Category: MacroNotes

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