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Chicago Business Barometer Drops Much Less Than Expected In December

(RTTNews.com) - Growth in Chicago-area business activity pulled back in December after accelerating sharply in November, according to a report released by MNI Indicators on Friday, although the pace of growth slowed by much less than anticipated.

MNI Indicators said its Chicago business barometer dipped to 65.4 in December after spiking to 66.4 in November, with a reading above 50 still indicating growth in regional business activity. Economists had expected the barometer to drop to 62.0.

A slowdown in the pace of growth in demand contributed to the modest drop by the barometer, as the new orders index fell in December after surging in November.

However, MNI Indicators said November's order book strength did translate into higher output in December, with the production index rising to an eleven-month high.

While the order backlogs index also rose to a five-month higher in December, the report said supply-side issues abated but remain a hindrance.

MNI Indicators said inflationary pressures on firms continued to ease in December, as the prices paid index fell for the fifth consecutive month and by the biggest margin in almost four years.

Steel and wood were reportedly less costly, but multiple firms continued to report tariffs keeping prices elevated and stifling business, MNI Indicators said.

"The MNI Chicago Business Barometer saw 2018 out in good health, assisted by a firm uptick in Production, cementing the best calendar quarter outturn in a year," said Jai Lakhani, Economist at MNI Indicators.

"Encouragingly, inflationary pressures subsided for a fifth consecutive month and should this continue, it will ease the burden on firms' productive capacities," he added. "Still, concerns over tariffs continue to linger in the background and stir uncertainty."

Looking ahead, MNI Indicators said 46.8 percent of firms believe their business will expand by a rate below 5 percent next year, while an equal share expect growth by a rate between 5 and 10 percent. Just 6.4 percent saw growth coming in above 10 percent.

Read the original article on RTTNews (http://www.rttnews.com/2965835/chicago-business-barometer-drops-much-less-than-expected-in-december.aspx)

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