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The Chicago Business Barometer fell 5.4 points to 60.8 in November from a one year high of 66.2 in October driven by a double digit drop in New Orders.
The Barometer‘s decline reversed nearly all of October’s sharp increase, leaving it back close to the September level. All five components which contribute to the Barometer fell between October and November.
In spite of the slowdown, orders and output continued to expand at a healthy pace. Production, New Orders and the Barometer itself have been running above 60 for four months in a row, suggesting continued firm growth in the US economy.
New Orders decreased by 11.7 points to 61.9 in November having increased sharply to a one year high in October. Overall orders remain firm and barring a sharp fall in December are likely to record firmer growth in Q4 than Q3. While some panellists said November was steady compared with a month ago, others reported a busy period in the run up to Christmas.
Production also expanded at a slower rate, but was the strongest component of the Barometer in November. It’s currently running above both its 10-year average and the average for the past 12 months.
In line with strong sales forecasts, companies built stocks at a slightly faster rate than in October but below September’s 41-year high. 66% of panellists reported that their current level of finished goods inventories was ‘about right‘ to keep up with demand.
Following the quicker pace of jobs growth in October, companies were less keen to hire in November. The Employment Indicator declined for the first time in three months to the lowest level since March.
Supplier Deliveries declined for the second straight month after five months of lengthening, contributing negatively to the Barometer but giving some relief to business.
Commenting on the Chicago Report, Philip Uglow, Chief Economist of MNI Indicators said, “Following the sharp rise in the Barometer to a one year high in October it wasn’t too surprising to see activity ease somewhat in November. Overall the trend remains firm and activity looks set to pick up in Q4 from Q3.“
