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Activity in the Chicago-area manufacturing sector continued to expand in November, according to a report released by the Institute for Supply Management - Chicago on Monday, with the report showing an unexpected acceleration in the pace of growth.
The ISM said its index of activity in the manufacturing sector rose to 56.1 in November from 54.2 in October, with a reading above 50 indicating growth in the sector. The increase by the index surprised economists, who had expected the index to slip to 53.3.
An acceleration in the pace of new order growth contributed to the improvement in the sector, with the new orders index edging up to 62.8 in November from 61.4 in October.
Production also continued to expand in November, although at a slower pace than in October, as the production index slipped to 57.6 from 63.9 in the previous month.
While the report also showed that the employment index rose to 41.9 in November from 38.3 in October, it remained below the key 50 level, pointing to a continued contraction in employment.
The ISM - Chicago also said that the inventories index edged up to 34.9 in November from 32.2 in October, while on the inflation front, the prices paid index rose to 52.6 from 48.6.
Commenting on the data, Peter Boockvar, equity strategist for Miller Tabak, said, "Today's better number follows also an upside surprise in October, but the stock market didn't respond then as it waited for the national ISM report to reconcile the regional surveys."
"The Chicago PMI though does confirm that manufacturing will be a key part of the hoped for recovery as consumer spending still remains uncertain," Boockvar added.
The Institute for Supply Management is due to release its national report on activity in the manufacturing at 10 am ET on Tuesday. Economists expect the index of activity in the sector to slip to 54.8 in November from 55.7 in October, indicating a slower pace of growth.
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