Chicago PMI at 55.6--Highest Since April 2012

Business Activity surged in production to 60.9 and new orders to 58.2, both 10 month highs. Employment registered 58.0, up 4.2 points from December and the largest gain since February 2002. Inventories moved up from its three month dip into the contraction level to a solid 55.0. Order Backlogs had a small gain of 1.5 points to settle at 46.6 in January.

Supplier Deliveries and Prices Paid did not keep up with the gains in the other sectors. Supplier Deliveries dropped back into contraction at 49.9 from 52.8 in December. Prices Paid has enjoyed five months above 60 but dropped 2.2 points to 60.7 in January.

Lead times for delivery of production material increased to a seasonally adjusted average of 38.5 days, up 6.4 days from December and the longest lead time since March of 2012. Buyers of M.R.O. Supplies can expect to wait an average of 10.8 days for delivery, slightly shorter than 11.1 days posted in December. Capital equipment posted an average lead time of 105.7 days, an increase of less than one day from December.

Survey panelists agreed 2013 is starting out slower than December but is still “looking fairly good to start.” One panelist commented, “Seems like companies have forgot [ten] how to provide service.” Another panelist suggested small businesses are still concerned about potential tax increases.

The Institute for Supply Management releases the Chicago Purchasing Manager Index monthly. The Chicago PMI survey covers manufacturing and non-manufacturing firms and is seen as a barometer of health for the industrial heartland. Any rating above 50 is seen as a sign of economic growth. All figures reported above are seasonally adjusted.