Chicago PMI decelerates sharply in May (by Steve Goldstein)

WASHINGTON (MarketWatch) -- The Chicago PMI dropped sharply to a reading of 56.6% in May from April's 67.6%, a sign of a weakening recovery, according to data released Tuesday. Production, new orders and order backlogs all dropped sharply. Economists polled by MarketWatch had expected a reading of 60.0%. "Whether by plan or by misfortune, the proportion of firms reporting buildup in inventories increased in May, showing the broadest increase seen since September 2006," the survey said. The national Institute for Supply Management's manufacturing gauge is due Wednesday.