MNI Chicago Business Barometer Cooled to 56.7 in January

--MNI Chicago Business Barometer 56.7 Jan VS 63.8 Dec 

--MNI Chicago: New Orders Weakest In Two Years

--MNI Chicago: Production Falls To 10-Month Low 

--MNI Chicago: Supplier Deliveries Abate To 17-Month Low

By Jai Lakhani

     LONDON (MNI) - The MNI Chicago Business Barometer dropped to 56.7 in

January, falling 7.1 points from December's downwardly adjusted 63.8.

     Four out of the five Barometer sub-components started the year lower.

Notable falls in Production and New Orders contributed to most of the 7.1-point

fall in the headline index.

     The decline marked the fifth time in two years, the Barometer has fallen on

a year-over-year basis. However, the Barometer continues to signal healthy

business conditions, recording a 24th consecutive reading above 50.

     Contributing to the bulk of January's downside was a drop in New Orders to

a two-year low. As a result of January's weak order book strength, Production

declined to a 10-month low. Firms noted an inability to absorb cost-push

pressures as a reason for customers being deterred from placing orders in

January.

     --ORDERS BACKLOGS

     Order Backlogs did not build on the momentum seen in the latter stages of

Q4 and eased to a three-month low.

     Supply-side issues continued to subside in January, although remaining

somewhat elevated. The Supplier Deliveries indicator fell to a 17-month low in

January.

     On balance, firms reported a relatively small drop in inventory levels in

January. However. there was anecdotal evidence of firms accumulating stock

because of new product launches and incentive programmes. Some firms increased

inventories in expectation of stronger orders, whilst others as a result of

higher lead times and tariffs.

     The Employment indicator was relatively unchanged from December's

three-month low but did still remain above the neutral-to mark.

     There were reports of firms having faced difficulties sourcing production

staff such as welders and machinists over the past three months.

     --PRICES ELEVATED

     Inflationary pressures remained elevated, although the Prices Paid

indicator was unchanged on the month, ending a run of five consecutive monthly

falls. Firms experienced higher prices in raw materials as well as metals, and

the continuation of tariffs. Firms also alluded to continued pressures of

supplier price increases.

     January saw firms asked if financial market volatility was having an impact

on their organization. A total 42.9% of firms believed their business was not

impacted by market volatility, slightly higher than the 40.8% of firms who

believed market volatility was impacting their organization. The remaining 16.3%

of firm were uncertain whether market volatility had impacted them.

     "The MNI Chicago Business Barometer had a sluggish start to 2019, pressured

by significant drops in both New Orders and Production, resulting in the lowest

headline reading in two years," Jai Lakhani, Economist at MNI Indicators, said.

     "Encouragingly, some anecdotal evidence pointed to temporary factors such

as holidays as the reason for dampening output as opposed to inherent weakness

in demand," he added

     The survey period ran from January 3 to January 21.

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

--MNI London Bureau; +44 203 865 3828; email: jai.lakhani@marketnews.com

--MNI London Bureau; tel: +44 203-586-2223; email: david.robinson@marketnews.com

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