CHICAGO PMI UNEXPECTEDLY ENTERS CONTRACTIONARY TERRITORY

The headline index fell to 49.0, defying economists' expectations for a tick up to 52.5 from March's 52.4 reading.

Any number below 50 on the index indicates contraction, so today's data suggests that manufacturing activity in the Midwest unexpectedly contracted in April.

The production sub-component fell to 49.9 from last month's 51.8 reading. The employment sub-component fell to 48.7 from 55.1.

The new orders sub-component, however, actually ticked up to 53.2 from 53.0.

Below are what some respondents to the survey are saying:

• Business activity was soft again in March, but we are optimistic for 2nd quarter and overall for 2013. Seems like some key raw materials are forecasted to moderate and even decline a bit over next several months, e.g. linerboard, resins.
• Our orders are consistent, we have a steady flow of work currently, 1st quarter was a huge improvement from 2012 start.
• New order intake is steady but remains at the lowered 2012 level. Afraid this may become the dreaded "new normal".
• "Business is steady as she goes."
• The economy is looking as if it is turning the corner. It is slowly gaining and looks like it will continue to do so.

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