Chicago-area business activity unexpectedly expanded at a faster rate in the month of July, according to a report released by the Institute for Supply Management - Chicago on Tuesday.
The ISM Chicago said its business barometer rose to 53.7 in July from 52.9 in June, with a reading above 50 indicating an increase in business activity.
The modest increase by the business barometer came as a surprise to economists, who had expected the index to edge down to 52.5.
An acceleration in the pace of new orders growth contributed to the improvement in Chicago-area business activity, with the new orders index climbing to 52.9 in July from 51.9 in June.
The report also showed that the order backlogs index jumped to 52.8 in July from 42.2 in June, indicating a notable recovery compared to the previous month.
On the other hand, the production index dipped to 54.5 in July from 57.0 in June, pointing to a slowdown in the pace of growth.
The employment index also pulled back to 53.3 in July after climbing to a four-month high of 60.4 in the previous month. The ISM Chicago said the drop indicates that hiring in the Chicago-area is fading.
With regard to inflation, the ISM Chicago said that the prices paid index crept up to 54.7 in July from 54.0 in June, suggesting a modest acceleration in the pace of price growth.
Peter Boockvar, managing director at Miller Tabak, said, "Bottom line, each of the regional manufacturing surveys has its own influences, whether tech in N.Y., defense in Richmond, energy in Dallas and autos in Chicago and we've seen a mixed bag in the data over the past few weeks."
Thursday morning, the Institute for Supply Management is scheduled to release its report on national manufacturing activity in the month of July.
"Tomorrow's ISM manufacturing index is expected to tick back above 50 at 50.2 from 49.7 in June, which was the 1st time below 50 since July '09," Boockvar said.
by RTT Staff Writer
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