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AUSSIE 3-YEAR TECHS

(U1) Holding Onto Gains

USDCAD TECHS

Trend Conditions Remain Bullish

US TSY FUTURES

Extending Lows After the Close

US TSYS SUMMARY

Reversing Overnight Risk-Off Tone

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Key Points – May 2021 Report

The Chicago Business Barometer™, produced with MNI, jumped to 75.2 in May, the highest level since November 1973. Demand provided a boost to business activity, but supply chain constraints remain.

Among the main five indicators, New Orders and Order Backlogs saw the largest gains, while Employment recorded the only decline.

Demand remained strong in May with New Orders jumping to the highest level since December 1983. The index now stands at 80.0, up from 72.9 in April. Production slowed 2.3pt to 70.6. Anecdotal evidence signals strong consumer demand, partly due to the fear of raw material unavailability.



Order Backlogs jumped 7.5 points to 80.7, hitting a 70-year high. Firms noted logistical issues and personnel shortages which are driving backlogs.

Inventories fell 8.7 points in April, dipping below the 50- mark for the first time since December 2020.

Inventories dropped to a 9-month low of 41.8, the second successive reading below the 50-mark.

Employment slipped back into contraction territory in May, following two months of readings above 50. The indicator declined from 56.4 to 49.8 and firms indicated difficulties finding new staff.

Supplier Deliveries rose to a 47-year high of 82.3 in May with supply chain constraints remaining a serious problem. Firms continuously noted delivery delays due to transportation issues and material shortages.

Prices paid at the factory gate fell to 88.4 in May, down from April's 41-year high of 91.5. However, several respondents said prices for commodities, such as steel, plastics, copper, or electronic components rose further.

The time to source Production Material and MRO Supplies rose to record highs of 85.9 days and 26.2 days, respectively, while sourcing time for Capital Equipment eased to 170.8 days.

The survey ran from May 3 to 18.

SPECIAL QUESTION

Considering the global shortage of computer chips, do you have contingency plans in place? While 46.2% do not use the product, 28.2% have no contingency plans in place and only 5.1% of respondents are about to create a plan. Anecdotal evidence suggests that some firms are using alternative chips, while others hold more inventory to manage volatility.

As tension in global logistics and component shortages increase, are you: (Select one or more) The majority is looking for ways to mitigate the risks and 51.3% are passing on higher costs to customers. One fifth looks to absorb the higher costs, while 30.8% are looking for alternative carriers.

Click below for the full press release:

MNI_Chicago_Report_-_2021-05.pdf

For full database history and full report on the Chicago Business Barometer™, please contact:sales@marketnews.com