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The headline Chicago PMI data showed a sharp deceleration for the month of May.  This continues a string of recent data points pointing to an economic slowdown.  More importantly, it’s pointing to weakness in the one truly strong leg of the economic recovery.  Stocks are shrugging off the news as a new bailout package is being crafted for Greece.  Econoday details the PMI data:

“A big slowdown for month-to-month growth in new orders helped pull down the Chicago PMI by 11 points in May to 56.6 to indicate the slowest rate of monthly growth since November 2009. New orders fell nearly 13 points to 53.5, still over 50 to indicate an increase compared to April but the weakest reading since September 2009. Growth in backlog orders almost entirely evaporated while inventories surged which may suddenly may indicate an unwanted build tied to slowing activity. Delays in deliveries shortened, which is also consistent with general slowing, while production, at 56.0, is still strong but well down from a run of 70 readings. Prices for raw material inputs, at 78.6 and in contrast to most of the readings, did not slow very much. A plus in the report is a comparatively mild slowing in employment, down nearly three points to a still strong 60.8 to indicate solid month-to-month growth in total payrolls as this report includes all areas of the economy. Markets are showing no significant reaction to the report.”

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