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(CEP News) - The ISM-Chicago business barometer unexpectedly rebounded in August to its highest reading since June 2007, in part due to the overall export boom, some economists say.
The strong reading of 57.9 follows a score of 50.8 in July and surpassed economist forecasts for a reading of 50.0. "It's not clear to us why the survey is so strong or whether it can last," said Ian Shepherdson, chief U.S. economist at HFE. "We know that the export boom overall is greatly helping manufacturers but it is hard to imagine it would generate such a jump in a single month. The Chicago PMI is very volatile and one month does not make a new trend." Prices paid fell back to 80.6 in the month, following an 90.7 reading in July, which was the highest reading since 1980. The prices index has a six-month average of 85.2. Production gained nearly 14 points to 63.4 from 49.2 in July, while new orders saw the fifth month in a row of growth, moving further up to 60.2 from a previous 53.5. Inventories fell to 52.2 from 54.9 in July, but still marked the second straight month of growth. Employment also fell, to 39.2 from July's 45.9. "The August Chicago Business Barometer reports that the threat of a recession spreading from the housing and credit sectors has yet to materialize and the negative impact even appears to be fading," Jack L. Bishop Jr from Kingsbury International said in a press release. He added that slow-no growth and spreading inflation are the twin messages of the report. "On net this was a strong report with the caveat being employment continues to struggle," said Ian Pollick, economics strategist at TD Securities. "Relative to similar regional surveys, the index is consistent with the uptick we saw in the August Empire Manufacturing survey as well as the Philly Fed Index in August, which was roughly in-line with expectations. These collectively prompt us to highlight upside risk to the ISM Manufacturing report out next week." The Chicago Business Barometer, a regional survey of business activity in Illinois, Indiana, and Michigan, is released by the Institute for Supply Management and Kingsbury International. By Stephen Huebl,
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, edited by Nancy Girgis,
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