MNI Chicago Business Barometer Eases to 57.4 in March

--Chicago Business Barometer Slips To Twelve-Month Low

--Barometer 61.7 Q1 2018 Vs 66.3 Q4 2017

--Production Lowest Since October 2016

--New Orders Lowest Since January 2017

--Prices Paid Remain Elevated

     LONDON (MNI) - The MNI Chicago Business Barometer fell 4.5 points to 57.4

in March, down from 61.9 in February, hitting the lowest level in 12 months.

     Firms' operations continued to expand in March, but the pace of expansion

moderated for a third straight month, settling at a fresh 12-month low. Three of

the five Barometer components receded on the month, with only Employment and

Supplier Deliveries expanding.

     Compared to March last year, the Barometer was up 0.5%. On the quarter, the

Barometer was down on Q4 2017 but Q1's outturn was still the second-best

calendar quarter result since Q2 2014 and the best Q1 outturn since 2011.

     Extending a trend set since the turn of the year, firms' count of output

and incoming orders fell in March. The Production indicator sunk to the lowest

level since October 2016, while the New Orders indicator decreased to a level

last seen lower just over a year ago. The two indicators, accounting for two

thirds of the headline Barometer, have fallen 28% and 19% since their respective

December highs.

     Joining Production and New Orders, firms' level of unfulfilled orders also

continued to level-off in March. The Order Backlogs indicator slowed for a third

consecutive month, to an eleven-month low, to hover just above the

neutral-level. Backlogs have trended lower since peaking late in 2017 on the

back of elevated demand and weather-induced disruptions.

     Supplier delivery times, however, inched higher and remain long by recent

standards. There were multiple reports of suppliers struggling to keep up with

orders of key inputs, ranging from steel to electronic components.

     The rate at which firms added to their stock levels also increased in

March, just before the kick-off of the new fiscal year. One firm reported

increasing inventories to purely because of longer off-shore lead times.

     Meanwhile, firms' appetite to add to their workforce grew in March though

businesses continued to lament the limited supply of high skilled workers. The

Employment indicator ticked up, rising to the second highest level in the past

12 months.

     This month's special question asked firms to forecast the level of incoming

orders over the forthcoming quarter. At 50.1%, most firms said they expect

orders to grow in Q2, with firms citing an anticipated pick-up in construction

activity and new product launches. Only 9.4% thought orders would decline with

the remainder predicting orders would be more or less unchanged.

     Input price inflation pressures, meanwhile, refuse to abate. The Prices

Paid indicator picked up in March, enough to take the quarterly average up to

the highest level since Q3 2011. Multiple firms reported the increased price of

steel, among other materials, as impacting their business while others noted

that persistently high prices were forcing them to find new suppliers.

     "The Chicago Business Barometer calendar quarter average had increased for

six straight quarters until Q1 2018, with the halt largely due to the recent

downward trajectory of orders and output," said Jamie Satchi, Economist at MNI

Indicators.

     "Troubles higher up in firms' supply chains are restraining their

productive capacity and higher prices are being passed on to consumers. On a

more positive note, firms remain keen to expand their workforce," he added.

     The survey period ran from March 1 to March 19.

--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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