Out Fox The $treet

The Chicago PMI came in today at a seasonally adjusted 61.1 much higher than expectations of a faltering economy. This number showed a nice jump from the 56.6 in May. More importantly the Production and New Orders components accelerated. With such a strong June report for the manufacturing sector in the Chicago area, the soft patch theory is starting to hold water. Production surged to 66.9 from 56.0 in May while New Orders jumped back over 60 from a very low 53.5 in May. These numbers jive with the rebound in industrial production in Japan during May and June following the disaster in March. Watch for a stronger ISM Manufacturing report tomorrow. Prior to the Chicago number today, the market expected a rather weak 51.8 which was a drop from last month. Now it wouldn't surprise us to see the number ramp up from the 53.5 in May. The correlation has been very strong in the past. Could a 54-55 number be possible?

Not to surprising to see this report on manufacturing. Just reaching lows not seen since 1980 is actually either encouraging or signs that this sector has farthur to fall. When stock losses are the worse since 1931, 1980 isn't all that bad. The early 70s recession along with 1980 had worst readings so maybe we should expect a pretty bad January or February numbers as well. Though 32 on this report is pretty horrific. The market has taken this report in stride though. Starting to be encouraging to see the market rally with such weak economic reports. The Institute for Supply Management, a trade group of purchasing executives, said Friday its manufacturing index fell to 32.4 in December, a greater-than-expected decline from November's reading of 36.2. Wall Street economists surveyed by Thomson Reuters had expected the reading to fall to 35.5. New orders fell to their lowest level on records going back to 1948. Prices fell as the number of respondents saying they had paid more in...