Chicago PMI makes up lost ground in July

The Chicago PMI rose to 54.7 in July, printing above 51.0 and consensus 50.8 expectations. The strongest reading for the headline index since January was driven by surges in production 61.8, previous- 49.8 and new orders 58.5, previous: 51.7, which is viewed as an encouraging signal. The employment index remained soft at 46.2 previous- 45.7, however, in line with other regional indicators in July. Since sharply declining in February, the Chicago PMI has diverged a bit from other early-month indicators of manufacturing and service sector activity.

"The July reading of 54.7 brings the index closer to other measures that suggest a modest pace of expansion. Price pressures remained subdued at the beginning of Q3 with the prices paid index at 54.5 previous: 53.3. A special survey question on wage growth noted that 40% of respondents reported wage growth of 1-2% within the past year, 19% reported wage growth of 3-4%, and about a quarter of survey respondents reported wage growth was unchanged. On balance, the activity side of the report as encouraging and read the prices side as indicating only mild price pressures", says Barclays.