'Wow' Economic Numbers Come Out; Let's See How Reuters Reports Them (Not Well At All)

Off the wires from Marketwatch (registration may be required; bolds are mine):

May Chicago PMI rises to highest level since October

Business activity expanded in the Chicago region for the 37th consecutive month in May, the National Association of Purchasing Managers-Chicago said Wednesday. The Chicago purchasing managers' index rose to 61.5% from 57.2% in April, much stronger than the expected decline to 56.2%. It was the highest level since October. Anything over 50% indicates growth. The prices paid index fell to 76.9% from 77.2%. The new orders index rose to 69.6% from 60.8%.

The very last number can be translated as "manufacturers are getting flooded with orders." Nice problem.


UDPATE: Reuters 10:04 a.m. -- "US Midwest business activity grows strongly." That's pretty good, but it's the immediate reax; let's see if and how they massage as the day goes by.

UPDATE 2: Reuters 10:36 a.m. -- Okay, the headline is good, but now the spin is ready (bolds are mine):

Midwest May business activity grows strongly

Business activity in the U.S. Midwest expanded at a faster rate than expected in May, with new orders and hiring bouncing back from weak April levels.

The report defied weakness in some other regions' data recently and suggested the Chicago regional economy was staying strong well into the second quarter.

The National Association of Purchasing Management-Chicago business barometer rose to 61.5 from 57.2 in April. Economists had forecast the index at 56.0.

A reading above 50 indicates expansion, and the Chicago index has been above that level for more than three years.

Questions to Reuters:

  • If above 50 indicates expansion, by definition, how can you call any of the April numbers (57.2, 77.2, 60.8) "weak"?
  • Could you specify other regions with weakness that needed to be "defied" (as if the weakness is fairly pervasive)? Although I was not able to find regional data at the Institute for Supply Management web site (found later in UPDATE 3), I was able to find this overview of the entire economy in April (Yes, I realize that the page referred to says "Also, the information in the regional reports is not used in calculating the results of the national report" [which, by the way, Reuters neglected to note]. I'm showing that the chance that there is meaningful weakness in an individual region is pretty low.):


    Across the board, April could be fairly characterized as an economy that's on fire. In fact, the "problem," as indicated in the Inventories numbers, is that things are so good that producers can't produce things fast enough! The chance that any one region is suffering from a great deal of "weakness" has to be close to zero. It's up to Reuters, in the face of the above, to show readers that I'm wrong.

So let's call this characterization of good numbers as weak, and the attempt to refer to conveniently unidentified "weak" regional data what it is, shall we? It's a fundamentally dishonest attempt to minimize good news by Reuters. Unfortunately it's par for the course.

UPDATE 3: Reinforcing the conclusion in Update 2, here is the list of April regional reports. Every single one has composite score over 50, even auto industry-plagued Detroit.


Not every region submits a report every month, but I struggle to see where Reuters can claim "weakness" in other regions that needed to be "defied."

UPDATE 4: Almost forgot -- the obligatory "good news may be bad news" warning at the end of the Reuters report:

"The Chicago PMI report certainly came in much stronger than anticipated and will continue to feed the uncertainty surrounding the June Federal Open Market Committee meeting," said Kevin Flanagan, fixed income strategist, global wealth management, at Morgan Stanley in New York.

Yup, the big bad Fed might stop the economy all by itself with an interest rate hike or two. Zheesh.

Just another day in Business Media Bias.

Cross-posted at BizzyBlog.com.

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