MNI: Chicago Business Barometer Declines to 61.9 in February

--Chicago Business Barometer Hits Six-Month Low

--Production, New Orders Both Soften Further in February

--Employment Gives Back Bulk of January Jump 

--Prices Paid at Six-Month Low 

By Jamie Satchithanantham

     LONDON (MNI) - The MNI Chicago Business Barometer fell 3.8 points to 61.9

in February, down from 65.7 in January, to the lowest level since August 2017. 

     Business activity continued to expand in February, although at a softer

pace than in January. All five of the Barometer components lost ground on the

month, but despite a second straight monthly fall, the Barometer was still up 8%

on last February and above the 2017 average of 60.8.   

     As in January, firms reported a slower pace of both incoming orders and

output in February. The New Orders indicator fell to a six-month low,

contributing the most to the Barometer's decline, while the Production indicator

also fell in February, down to a level last seen lower in September. Despite

trending lower recently, both indicators remain elevated relative to recent

years indicating a continued robust level of business activity. 

     Whilst high through much of 2017, firms' level of unfulfilled orders

continued to trend back towards more familiar territory in February. The Order

Backlogs indicator fell for a second consecutive month, to its lowest level

since April 2017. Supplier delivery times also eased on the month but February's

outturn still ranked as the fourth highest in just shy of three-and-a-half

years.      

     The rate at which firms added to their stock levels decreased in February,

falling to the lowest level since October. Inventories had peaked in December,

hitting a three-year high, but have since fallen back towards to the levels set

earlier in 2017.  

     Hiring intentions also eased in February, edging down from the

near-six-year high set last month. As was the case throughout 2017, firms once

again reported a shortage of skilled workers when searching to fill vacancies.  

     This month's special question asked firms to assess the impact of input

prices over the coming 12 months on their business operations. Exactly half of

the firms said that they expected the input price landscape to weigh on and

challenge regular business operations, compared to just 6% who thought it would

aid their activities. 

     The remaining 44%, on the other hand, saw it having next to no impact on

their activities, with multiple firms claiming that they would expect any

increase in input material costs to be offset to some extent by corporation tax

cuts.       

     As for February, input price inflationary pressures remained elevated

despite receding from January's four-month high. Tariffs on cold rolled steel

were said to explain why steel prices remained dear in February, with wood, foam

and alloy prices also quoted as particularly expensive.   

     "Disruptive weather conditions this month and large promotions at the

back-end of last year appear to have weighed on demand and output in February,

but despite the Barometer's broad-based decline activity remains upbeat," said

Jamie Satchi, Economist at MNI Indicators. 

     "That said, a large proportion of firms are anxious about the cost of input

materials, and appear poised to pass on these higher costs to consumers if

inflationary pressures do not fall," he added. 

     The survey period ran from February 1 to February 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

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