MNI Chicago Business Barometer Declines to 58.4 in October

--Chicago Business Barometer Down for Third Month in a Row

--New Orders Lowest Since Jan 2017

--Delivery Times Longest in 14-And-A-Half Years

--Prices Paid Remain Elevated

     LONDON (MNI) - The MNI Chicago Business Barometer declined to 58.4 in

October, the lowest reading since April, and down 2.0 points from the 60.4

recorded in September.

     Business activity continued to expand at a healthy rate this month, despite

the pace of activity decelerating for the third month in a row. A decline in

order book growth and unfinished orders more than offset a rise in output,

delivery times and employment, sending the Barometer to its lowest reading in

six months. On the year, the Barometer was down 10.7%, the biggest

year-over-year fall since December 2015.

     Despite beginning the final quarter on a softer footing, activity remains

robust relative to recent years. The headline index still sits above its

five-year average, with the latest moderations possibly reflecting a reversion

to more normal levels after a series of strong performances over the past 12

months.

     --NEW ORDERS LOWER

     Partly responsible for the Barometer's decline this month was an easing in

order book growth. New Orders slipped to its lowest level since January 2017 in

October, the sixth time the indicator has lost ground this year. Output, on the

other hand, did strengthen, albeit marginally. Together, the two indicators

account for 60% of the headline index.

     Firm's levels of unfinished work eased sharply in October. Order backlogs

receded to a level last seen lower in April when it slipped below the neutral

mark for the first time in 13 months. In contrast, average wait times on key

materials picked up. The Supplier Deliveries indicator rose to its highest level

in over 14 years in October, with some firms attributing the increasing wait

times to under-staffed suppliers.

     Firms' level of stock was broadly unchanged in October, with the

Inventories indicator holding on to the bulk of the gain recorded in September.

As in recent months, some firms continued stockpile goods in a bid to mitigate

against future price hikes and to keep prices down for the holidays.

     Hiring activity intensified this month, with the Employment indicator

rising for the first time since July. Firms continued to report ongoing

difficulties recruiting both skilled and unskilled workers, while others

prioritized retention of their existing workforce.

     --PRICES REMAIN ELEVATED

     Meanwhile Prices Paid, a gauge of input price pressures, remained locked in

a historically elevated range. Some firms reported seeing higher unit prices on

invoices for the first time, on the back of further import tariffs levied on

China, while others said they expected shortages to push prices higher over the

coming months and squeeze profit margins.

     This month's special question asked firms whether they saw allocation

issues affecting their operations in Q4. The results were fairly even, with

31.9% of respondents each saying yes or maybe and the remaining 36.2% saying no.

     "The MNI Chicago Business Barometer continued to revert back towards

trend-levels in October, cooling off after a hot and unsustainable run last

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

     "Production continues to be restrained by issues between firms and their

suppliers, reflected by delivery times rising at a 14-year high, while the

latest implementation of tariffs on Chinese goods appears to be exacerbating

uncertainty across firms," he added.

     The survey period ran from October 1 to October 18.

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

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