Outside Economics

92 Miles Can Make a Big Difference

Posted by Wendell Brock, MBA, ChFC on Fri, May 31, 2013

You would think that two metropolitan cities only 92 miles apart are close enough to be almost sister cities and what happens in one would almost insure that the same thing would happen in the other. NotChicago so …  

Today the Chicago Purchasing Manager Index (CPMI) came out with a large jump from 49.9 to 58.7 – a reading above 50 indicates expansion. At the same time, 92 miles to the north, the Milwaukee Purchasing Managers Index (MPMI) came out with a larger than expected drop – the index fell to 40.7 down from its reading in April of 48.8. This sure adds some volatility to the markets as well as uncertainty to the area.

Chicago is basically saying we are doing well and actually expanding; while Milwaukee is saying just the opposite, we are hurting and contracting. The indexes are comprised of production, new orders, and order backlogs from surveys of many manufacturing industries and companies. 
milwaukee scene
All of this comes as the Commerce Department reported that household purchases declined 0.2% in April after a 0.1% rise in March. This slowing of consumer spending will ultimately hurt if it continues through the summer months. The countered by the consumer-sentiment index rose in May to 84.5 the highest level since July of 2007, just before the meltdown. This was a huge jump from April’s reading of 76.4. 

This combined with the housing numbers from Case Shiller’ Home Price Indices for the first quarter of 2013 it is a wow – the numbers were strong with ten months of consecutive gains. The National Association of Home Builders reported that their builders confidence rose in May as well all showing the economy gaining steam. 

What do these indicators mean … perhaps that for some folks things are recovering and gaining steam, while others are still lagging, or perhaps retreating? This sort of confusion adds a lot of volatility in the market, as it considers these indices in its movements. The indexes are a little like the liars club – no one knows who to believe as they try to describe their view of the economy. Economic strength in any sector is welcomed good news for all of the country, as it all helps. Now if we can get the federal government to stop borrowing so much money and expand their tax and spend policies, maybe we can get some real growth and more economic stability.

Topics: Metropolitan cities, Miles, Chicago, Milwaukee, Purchasing Managers Index


Wendell W. Brock, MBA, ChFC

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