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Chicago Survey Finds Higher Interest Rates Squeezing Investment Plans into Q1

US DATA
MNI (London)

Chicago Business BarometerTM asked firms in January "As interest rates potentially approach their peak, are your investment plans changing?"

  • 30.6% expect to keep investment plans the same and 27.8% plan less investment in light of high interest rates. Only 2.8% expect higher investment levels.
  • The bulk (38.9%) of respondents remained at present unsure as to changes to their investment plans as uncertainty surrounding the year ahead's economic outlooks prevails.
  • US advance Q4 GDP data signalled that the drag from private investment intensified from - 0.6pps to -1.2pps, its largest since the pandemic. The investment hit came as non-residential investment broadly paused after a strong Q3.
  • The tepid non-residential investment outturn is all the more notable by the sharp slowdown in core durable goods orders, from 7.5% in Q3 to 0.1% annualized in Q4, suggesting little prospects of an uplift in the immediate months ahead.

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