MNI Chicago Business Barometer Rises to 57.6 in April

--Chicago Business Barometer Ends Three-Month Downward Run

--Prices Paid Highest Since May 2011

--Production Higher in April

--New Orders Lowest Since January 2017

By Jamie Satchithanantham

     LONDON (MNI) - The MNI Chicago Business Barometer rose 0.2 points to 57.6

in April, up from 57.4 in March, snapping a three-month downward trend.

     Business activity continued to rise at a solid pace in April, with growth

in firms' operations up for the first time this year, albeit marginally. Three

of the five Barometer components receded on the month, with only Production and

Supplier Deliveries finding room to grow.

     While output levels rose in April, driving the rise in the Barometer, order

book growth softened. The Production indicator ended a run of three consecutive

falls, although remaining shy of the February level. The New Orders indicator,

on the other hand, extended the downward momentum shown since the turn of the

year, easing to a 15-month low in April. The two indicators account for 60

percent of the headline Barometer and sit 2.2% and 10.4% below their respective

year-ago levels.

     Firms' levels of unfulfilled orders continued to recede in April, falling

for the fourth straight month and slipping below the neutral-mark for the first

time in a year. Backlogs rose sharply at the tail end of last year but have

fallen just as quickly, as temporary factors faded away and demand softened.

     Supplier delivery times continued to lengthen, however, with evidence from

multiple survey respondents that sourcing steel was particularly difficult. On

the year, the associated indicator was up almost 20%, hand-in-hand with the long

running trend of dearer material prices and the more recent implementation of

tariffs.

     In line with the start of the new fiscal year firms' level of stock

continued to expand in April, although at a softer pace than last month. The

Inventories indicator dropped to the lowest level since last August, but is

still up on a year-on-year basis. Firms' hiring intentions also moderated in

April, with the Employment indicator falling to a six-month low.

     Input material prices continued to rise in April, soaring to a

near-seven-year-high. Up 22.8% on the year, the Prices Paid indicator surpassed

the 70-mark in April for only the third time since 2012. While a wide range of

inputs were reported as more expensive on the month, with steel a common thread

among respondents, some firms reported that they felt uncertainty stemming from

recent trade discussions was driving prices higher.

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

government's recently implemented tariff programme would have on their business.

The majority of firms, just over 50%, deemed its impact to be insignificant

compared to just under a third who foresaw it having a major impact on their

operations. The remaining 16.7% saw it having no effect on their business.

     "While the MNI Chicago Business Barometer ended a three-month falling

streak in April, supply constraints faced by firms intensified and continue to

weigh on activity. Longer delivery times are proving attritive, while dearer

materials bite further into margins" said Jamie Satchi, Economist at MNI

Indicators.

     "Recent uncertainty among suppliers appears to be assisting the upward

march in prices, but the majority of firms were optimistic any negative impact

stemming directly from recently implemented tariffs would be minimal," he added.

     The survey period ran from April 1 to April 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

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