The flood of negative economic news continued earlier today as the Chicago Purchasing Managers index came in at56.6 down a full 11.0 points from the 67.6 reported at the end of April and down 14.6 points from the high achieved in February 2011.

The new reading of 56.6 continues to indicate an overall growing economy in the Chicago area however at a much reduced pace compared to earlier this year. The index, which is technically called the Chicago Business Barometer, has now recorded 12 months in a row above the 50.0 mark needed to indicate a growing economy.

The Chicago Purchasing Manager report provides an indicator as to what we can expect out of the Institute for Supply Management (ISM) Purchasing Manager Index on Manufacturing which is due out tomorrow. The ISM PMI provides a better look at the steel consuming markets compared to the Chicago PMI. The Chicago Index is representative of all companies and not just manufacturing.

Business Activity:

New orders and production posted their largest declines in several years, but remained positive;

Inventories accelerated buildup;

Breadth of employment expansion softened but remained strong.

Buying Policy:

Lead times reported for production material and capital equipment countered decreases in April while lead times for MRO supplies remained steady.