MNI Chicago Business Barometer Climbs to 66.2 in October

--Chicago Business Barometer Highest Since March 2011

     LONDON (MNI) - The MNI Chicago Business Barometer rose to 66.2 in October,

up from 65.2 in September, hitting the highest level since March 2011.

     After a bullish September showing, firms' optimism regarding the business

landscape found further room to grow as they entered the final quarter of the

year. Of the five Barometer sub-components, only Employment and Supplier

Deliveries slipped from their respective September levels.

     Steering the month's result, both demand and output climbed for the third

straight month to robust levels. New Orders rose to its highest level since June

and the second highest since May 2014 while Production hit its highest level

since August 2014. Together, both indicators account for 60% of the Barometer.

     Order Backlogs have trended upwards since the start of Q2 and this extended

into October. The indicator reached a level not seen in over 43 years, having

had set a 29-year high last month. The carryover of backlogs into October,

though partially brought on by the disruption caused by the recent storms, when

viewed in the context of growing orders paints a picture of healthy demand.

     The storms across the country were also culpable for both longer supplier

delivery times and firms stockpiling goods last month but in October both

Supplier Deliveries and Inventories softened. There was, however, anecdotal

evidence from panelists that the lead times for metals had lengthened in

October.

     For the fourth time this year, the Employment Indicator slipped below 50

into contraction territory. Firms have repeatedly reported a shortage of skilled

and trained workers and have resorted to having existing staff working overtime

or to hiring temporary workers. In what was a new development, there was

evidence of firms losing their skilled workers for higher wages elsewhere in

October, further reinforcing the shortage of this profile of employees.

     This month's special question asked businesses whether they saw their

organization as growing, stable or declining in the final quarter of the year.

An equal proportion of businesses (44%) expected their business to expand or

remain stable in the final quarter of 2017 while the remaining 12% of businesses

saw their operations contracting. Q4 is typically a busy month for businesses

and this result runs consistent with the survey's narrative of robust business

confidence.

     Inflationary pressures at the factory gate softened in October, losing

almost half of last month's sizeable gain. This reflected a partial

stabilization in material prices and an abating of input shortages, both

initially induced by the storms. That said, plastic and metal prices were said

to have remained high in October.

     "Firms kicked off Q4 in buoyant mood with only 12% expecting activity to

decline between now and the close of the year. Despite the MNI Chicago Business

Barometer hitting a six-and-a-half year high, and output and demand in seemingly

rude health, concerns remain over firms' inability to attract and retain skilled

workers." said Jamie Satchi, Economist at MNI Indicators.

     The survey period ran from October 2 to October 18.

     For more information please email info@mni-indicators.com. Call on +44 203

865 3812.

[TOPICS: M$U$$$]