The Institute for Supply Management (ISM) and Market News International (MNI) have released the Chicago Business Barometer, and the number was an absolute dud for the month of July. Thursday’s headline purchasing managers’ index (PMI) reading was 52.6. While this remains in positive territory, the prior month’s reading was 62.6. Bloomberg had the consensus estimate all the way up at 63.2, and Dow Jones was calling for a reading of 63.0.

The first thing that has to be considered after a massive 4.0% headline GDP growth for the second quarter on Wednesday is that this PMI is technically not a second-quarter number — it covered July, while the second quarter ended in June. That is rather obvious on the surface, but some investors may wonder how the readings can be such night and day in barely a 24-hour period.

Thursday’s 10-point drop in the Chicago Business Barometer was to the lowest reading since June of 2013. It is also down from a cycle peak in May of 65.5. Blame for the drop was placed on a decline in the production and the ordering components. A quote that stands out:

A monthly fall of this magnitude has not been seen since October 2008 and left the Barometer at its lowest level since June 2013. In spite of the sharp decline this month, feedback from purchasing managers was that they saw the downturn as a lull rather than the start of a new downward trend. This was especially so given the recent strong performance and the fact that Employment managed to increase further in July.

The ISM/MNI survey is compiled as an index of business conditions in the Chicago area. Manufacturing and non-manufacturing companies are surveyed, so the number is not exactly an apples-to-apples comparison to broader manufacturing surveys. A reading above 50% indicates expansion.

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