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Today's release of the August Chicago Purchasing Management Association index surprised analysts by showing an unexpected slowdown throughout all phases of manufacturing in the Midwest, signaling a possible end to the recent torrid expansion. The NAPM business index fell to 46.5 from 52.0 in July. A reading above 50 reflects expansion in the manufacturing sector, while a number below 50 denotes contraction or slowing. The Chicago report is closely watched for clues as to where the National Association of Purchasing Management index, which will be released tomorrow morning, might come in.
Another bright spot in today's report is the drop in the prices paid index to 58.6 from 70.0 in July, nearly 16 points lower than March's high of 74.2. The new orders sub-index, an indication of future demand for manufactured products, fell from 53.9 in July to 43.3 in August, its lowest level since January 1991.