MNI 5 Things: MNI Chicago PMI Shows Underlying Price Pressures

--MNI Chicago PMI Rises 1.4 to 65.5 In July, Prices

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

Business Barometer:

     - The MNI Chicago Business Barometer rose for the fourth straight month in

July, up an additional 1.4 points, to start the third quarter of the year at a

six-month high of 65.5 -- the best outturn for a month of July since 1994. On

the quarter, the Barometer averaged in at 61.5 in Q2, so a fair increase in Q3

is on the cards should momentum from July carry forward into the remaining two

months of the quarter. 

     - For the first time in almost a decade, July saw the Prices Paid indicator

surpass the 80-threshold, continuing to point to underlying inflationary

pressures. Wood and paper were among the materials said to have increased in

price in July, but inputs affected by the implementation of recent import

tariffs -- such as flat roll steel and certain alloys -- continued to dominate

firms' comments. 

     - Like the headline index, both New Orders and Production notched half-year

highs in July. Despite starting the year softly, cooling somewhat off the back

of a stellar end to 2017, both demand and output appear to be gaining traction,

coinciding with the typically busy summer holiday period.

     - For the ninth month in a row July saw the Employment indicator put in an

above-50 reading, meaning that on balance firms were more inclined to add to

their workforce on the month than to trim it. Firms have reported a range of

factors supporting their appetite for new workers, such as higher demand and

inefficiencies spread across production lines, both consistent with elevated

Order Backlogs indicator, and a persistent shortage of workers with adequate

skill-sets. 

     - This month's special question asked firms to predict whether new orders

over the coming third quarter would come in higher, level or lower than their

respective second quarter level. Compared to last year, when the same question

was proposed, although roughly the same proportion saw orders increasing, a

greater share saw orders falling or were unsure - likely reflecting heightened

ambiguity and/or pessimism surrounding the global trade landscape.   

--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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