MNI 5 Things: MNI Chicago Barometer: Price Pressures Continue

--Business Barometer slipped to 3-month low 63.6 in August

By Jamie Satchi

     LONDON (MNI) - The following are the key points from the August MNI Chicago

Business Barometer:

     - The MNI Chicago Business Barometer snapped a four-month winning run in

July, easing 1.9 points to a three-month low of 63.6. The result was, however,

the best August outturn since 1994 and means the Barometer would have to fall to

55.4 in September for the third quarter average to come in flat versus the

average Barometer reading over April-June.   

     - With both New Orders and Production holding up in August, posting

marginal gains, it was Order backlogs, Supplier Deliveries and, to a lesser

extent, Employment, responsible for the August slide. Growth in unfinished

orders eased to a four-month low, while delivery times lengthened at the softest

pace in eight months - both, however, remain elevated, well above their

respective long-run averages.

     - Inventories grew again in August after contracting in July. Robust

demand, new product launches and stockpiling of key inputs were key reasons,

according to firms. This month's first special question asked firms about their

perception of their stock level and while roughly the same proportion of firms

felt what they held was about right compared to this time last year when the

same question was proposed, a larger share thought what they held was

insufficient.   

     - Input prices remained a significant hindrance to firms, despite pressures

easing. The indicator remained above the 80-level, a key threshold that was last

broken before July this year all the way back in 2008. Firms continued to lament

the impact of U.S. tariffs on key materials and also mentioned price pressures

across a range of materials -- from steel to resin to foam.  

     - Leading on from this theme, August's second special question asked firms

whether they had passed on higher input prices to their customers. Just under

two-thirds said they had, with some saying they had implemented price hikes at

the start of last month. Others said that whilst they had resisted up until now

due to intense competition, absorbing the higher costs, noted they may be forced

to increase prices in coming months.      

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

--MNI London Bureau; +44 203-586-2226; email: jamie.satchithanantham@marketnews.com

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