Chicago industrial activity slows
Manufacturing activity in the industrialized Chicago area slumped in October, while inflation pressures increased sharply, according to a survey released Wednesday by the National Association of Purchasing Management-Chicago.
The monthly business barometer of activity in northern Illinois and northwest Indiana, typically referred to as the Chicago PMI, fell to 49.7 this month, marking the third time this year that the index slipped below 50, NAPM-Chicago said.
Readings below 50 indicate a contraction in economic activity while numbers above that level show expansion.
The October reading, down from 54.2 in September, came in well short of market expectations. Economists surveyed by Dow Jones Newswires had estimated a reading of 53.0 this month.
The prices paid component of the index jumped to 74.7 in October, up from 59.0 last month, indicating significant inflationary pressure, NAPM-Chicago said.
"With broadening inflation and disappearing economic growth, the economy is more clearly entering a pattern of no-growth combined with rising inflation known as stagflation," NAPM-Chicago said in a statement.
Compared to some other economic data, the Chicago report is considered more forward-looking in terms of businesses' future plans. It also serves as a potential indicator of nationwide activity ahead of the monthly manufacturing index released by the Institute for Supply Management, due for release Thursday.
The manufacturing data seemed to contradict other data released Wednesday that showed improvement in economic conditions.
the U.S. Commerce Department reported that gross domestic product climbed 3.9 percent in the third quarter -- a number that exceeded economists' expectations and represented the strongest quarterly growth since the first quarter of 2006. Yet the Commerce Department report also showed that inflation is on the rise.
Payrolls firm Automatic Data Processing estimated that the U.S. economy produced 106,000 private sector jobs in October, a sign that Friday's monthly Labor Department employment report could beat current projections.