MNI Chicago Business Barometer Declines to 60.4 in September

--Chicago Business Barometer Down for Second Straight Month 

--New Orders, Production Lead Barometer Fall 

--Prices Paid Remain Elevated 

--Hiring Intentions Soften While Delivery Times, Backlogs Rise

     LONDON (MNI) - The MNI Chicago Business Barometer fell to a five-month low

of 60.4 in September, down 3.2 points from August's 63.6.

     Business operations continued to improve at a solid clip, despite activity

decelerating for a second straight month. Moderation in both output and order

book growth, alongside weaker hiring sentiment, were culpable for the

Barometer's decline, offsetting slightly longer delivery times and a higher

count of unfinished orders.

     Although down on a year-over-year basis for only the second time since

January 2017, the Barometer continues to indicate strong overall business

conditions, with all key measures of activity above their respective long-run

levels. Over Q3, the headline index averaged 63.2, the best calendar quarter

outturn this year.

     Production and New Orders growth remained solid, despite both softening in

September. Production eased to a 6-month low and New Orders growth ran at its

slowest pace in 5 months. Anecdotal evidence continued to report some firms

outperforming their own forecasts, but others noted a slowdown in output and

weaker demand.

     --BACKLOGS PICK UP

     After easing last month, levels of Order Backlogs rose in September.

Healthy levels of demand have left firms unable to complete orders, exacerbated

by allocation issues surrounding key input components and employment shortages.

Reflecting this, Order Backlogs averaged a three-decade calendar quarter high in

the three months to September.

     Supplier Deliveries also notched a rise in September, having shortened over

the prior two months. There was evidence that Hurricane Florence impacted on

operations, specifically trucking routes, while the wider-effects of import

tariffs and material shortages continued to rumble on in the background.

     Firms continued to add to their stock levels building on August's marked

rise. While fears surrounding the availability of inputs continued to encourage

stockpiling, forecasts of higher future demand also led to the rise in

Inventories. Hiring activity continued to ease this month, reverting towards

long-run averages. Firms still appear open to adding to their workforce, but

difficulties remain identifying adequate workers.

     --PRICE PRESSURES REMAIN

     There were no signs of an alleviation of input price pressures. Although

the Prices Paid indicator did ease in September, it remained hemmed in a range

consistent with a 10-year high on both a monthly and calendar quarter basis.

Tariffs continue to push prices higher alongside material shortages; sourcing

electrical components proved particularly difficult, according to firms.

     This month's special question asked firms how they thought their delivery

times would fare in the final quarter of the year. Just over half of firms saw

delivery times lengthening versus just 6.0% who saw their items getting to them

quicker. The remaining42%, predicted no change.

     "The MNI Chicago Business Barometer slipped to a five-month low this month,

courtesy of a softening across both Production and New Orders. That said, the

survey continues to indicate robust business conditions, reflected by the best

calendar quarter outturn this year in Q3," said Jamie Satchi, Economist at MNI

Indicators.

     "Supply-side frustrations continue to hamper firms' production lines and

the majority of firms expect delivery times to lengthen further, anticipating

ongoing trade disruptions to weigh on suppliers," he added.

     The survey period ran from September 3 to September 20.

--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

[TOPICS: MAUDS$,M$U$$$,MT$$$$]