Two Known Knowns About the Economy

Investors are confused: Is the economy strong or is it weak? The answer is "Yes." The labor market is strong, but the manufacturing side of the economy is weak. We've all known that for a while. Today's indicators confirmed what we know.

On the weak side today was the ISM Chicago Business Survey as evidenced by the drop in its Purchasing Managers Index (PMI) from 48.6 in April to 40.4 in May. The Chicago PMI reading combines manufacturing and services into one report unlike the national ISM reports. We already knew from the five regional Fed business surveys that manufacturing remained weak around the country during May, as we reported yesterday.