WHOA: CHICAGO PMI SURGES TO 58.7

REUTERS/Kevin Lamarque

UPDATE: The May Chicago PMI survey results are out.

The headline index surged to 58.7 from 49.0 last month.

Economists were expecting a much smaller increase to 50.0.

The number indicates that regional manufacturing in the Midwest expanded at a moderate pace in May after contracting slightly in April.

The production sub-component rose to 62.7 from 49.9 in April, while the new orders index advanced to 58.1 from 53.2.

The employment sub-component rose to 56.9 from 48.7.

Below is color from survey respondents:

Lately the months start good and then end bad.Three months of declining sales in one of our core product lines indicates a slow down, though there are a couple of others hanging in there.Some primary commodity resins we buy are starting to moderate and even decline a bit in price.Business activity should be picking up and be stronger by this time of the year, but a bit more delayed than usual, so some concern there.With the second corrugated linerboard increase in 6 months, the producers are showing us what an oligopoly is all about.Corrugated costs are going up based on supposed paper demand increases. The timing of this is a bit off based on only modest increases in market demand. I expect this increase to fail with time. Most other items are not increasing at this time.New orders have been light since March, but the sales people are still optimistic that a couple of big orders are soon to be released.

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