MNI Chicago Business Barometer Eases to 63.9 in November

--Chicago Business Barometer Slips to Three-Month Low

--Prices Paid Rise in November

--Supplier Deliveries Highest Since April 2004

--Employment Highest Since May

     CHICAGO (MNI) - The MNI Chicago Business Barometer eased to 63.9 in

November, down from 66.2 in October, to stand at the lowest level in three

months.

     Despite receding from October's six-and-a-half year high, optimism among

businesses recorded the fourth highest outturn this year. The Barometer has

expanded for 21 straight months and is poised to see out 2017 in solid fashion.

     Output expanded at a robust rate in November, as businesses continued to

benefit from healthy domestic conditions and an abating of the disruption

brought about by the recent adverse weather. New Orders, although retreating

from October's four-month high, remained in good health. Of the Barometer's

other three sub-components, Order Backlogs was the only other to also lose

ground during the month.

     Backlogs have generally trended upwards for much of 2017, culminating in a

43-year high last month. Though partially driven by healthy demand, the gains

notched in more recent months were also explained by a carryover of orders after

the recent storms. As the associated disruption continued to wind down, coupled

with softer new orders, backlogs eased to a three-month low.

     Companies faced longer vendor lead times in November and there was evidence

that this, along with solid demand, led them to stockpile goods. The Supplier

Deliveries indicator expanded at the fastest pace for more than thirteen years

while the Inventories indicator climbed to an eight-month high.

     After slipping into contraction territory for only the fourth time this

year in October, the Employment Indicator returned to expansion in November. The

tight labour market has meant firms have had difficulties recruiting adequately

trained personnel. This month, although firms did add to their workforces, there

was again evidence of them turning to temporary workers, unable to secure

skilled workers within their current pay structure.

     This month's special question asked businesses to predict the effect of a

further hike in interest rates on their activities. The majority of firms,

exactly three-in-four, saw it having no material impact while only 23% said it

would harm their business. One more hike has been pencilled in before the turn

of the year by the Federal Reserve and the minutes from the most recent policy

meeting revealed many policymakers felt a further rise in rates in the near term

was "warranted".

     Inflationary pressures at the factory gate remained elevated in November,

with the Prices Paid indicator at the third-highest level this year. Firms

reported a wide range of input prices failing to edge down from heightened

levels, some initially induced by the hurricanes a few months ago.

     "Despite November's fall, the MNI Chicago Business Barometer remains on

track to deliver the first full year of expansion in three years. Firms seem to

have navigated through the worst of the bad weather conditions in recent months,

though supplier deliveries rising to a thirteen-year high and persistent, high

input costs suggests the effects are yet to fully dissipate away," said Jamie

Satchi, Economist at MNI Indicators.

     The survey period ran from November 1 to November 21.

--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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