A monthly index of manufacturing activity in the Chicago area signaled that the sector unexpectedly expanded at a slower pace in July.
The Purchasing Management Association of Chicago said Wednesday that its overall index decreased to 51.2 in July from 53.3 in June. An index reading above 50 means manufacturers reporting improved business outnumbered those reporting deteriorating conditions.
“Automobile plant shutdowns could have made the month less strong than it fundamentally is,” said Robert Dederick, an economic consultant at Northern Trust Co. in Chicago.
Auto plants usually shut down during July to perform maintenance on equipment and prepare to assemble new models.
Inflation remained subdued; the index of prices paid stood at 53.0, unchanged from June. The employment index fell to 43.2 from 48.6 in June, suggesting the job market worsened in the region.
Investors watch the Chicago area report because it tends to foreshadow the National Association of Purchasing Management’s index, a nationwide measure. That report is scheduled for Thursday.
After a pause earlier this year, analysts said, manufacturers are preparing to step up production to replenish depleted warehouses. Earlier this week, the APICS/Evans index, designed to give an early reading on factory activity each month, rose to 53.0 from 50.1 in June.
The boost in manufacturing to restock inventories could play out by summer’s end, though, analysts said.
