Chicago Manufacturing Very Strong

- Chicago Purchasing Manager for May rose to 61.5 versus estimates of 56.0 and a reading of 57.2 in April.

BOTTOM LINE: Manufacturing in the Chicago area unexpectedly accelerated this month, and orders placed with factories were the highest in more than a year, Bloomberg said. The purchasers’ orders measure rose to 69.6, the highest since March 2005. The employment component of the index rose to 52.8 from 47.2 the prior month. The Prices Paid Index fell to 76.9 from 77.2. I continue to believe manufacturing will decelerate over the coming months as US growth slows to average rates. The Prices Paid component has likely peaked for this cycle.