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The Chicago Business BarometerTM, produced with MNI, increased by 7.7 points to 44.9 in December. This month’s recovery broke a three-month streak of falls, yet the index remained contractive for a fourth consecutive month.
The majority of sub-indexes improved over the month, led by Order Backlogs and New Orders whilst upticks in Production and Supplier Deliveries were more muted. Inventories, Employment and Prices Paid all weakened and only Order Backlogs, Supplier Deliveries and Prices Paid were above 50.
- Production rose by 3.3 points to 39.2 in December, improving from November’s 29-month low. Material and staff shortages were cited as hampering production, which remained below the 50-breakeven mark since September.
- New Ordersjumped by 13.4 points to 44.1, the highestsince August. A number of last-minute and year-end blanket orders has provided a solid December boost.
- Order Backlogs saw the largest December increase, rising by 17.6 points to 53.7, giving back more than the November fall. Order Backlog levels are now again in line with the 12-month average of 54.4, due to the unanticipated boost in December orders coupled with continued shortages.
- Employment weakened by 6.3 points to 40.8 in December, the second lowest level since H1-2020 and only marginally above the September low. Firms struggled to replace employees that had retired or changed workplaces.
- Supplier Deliveries rose by 2.8 points to 52.7, as improved response times were experienced.
- Inventories fell by 11.8 points to a five-month low of 48.0 as firms continued to normalize stock levels.
- Prices Paid eased a further 2.1 points to 64.1 in December, the lowest since September 2020. The index has followed a general downward trajectory since November 2021. Some firms are expecting higher labor costs, whilst others highlighted lower demand and falling oil and steel prices pushing prices down. Firms are actively pushing back against higher supplier pricing plans.
We asked firms how they see their capacity utilization rate in this year’s lead-up to the holiday season compared to last year. 26% of respondents see capacity utilization at 90%, 21% see it at 80% and 18% at 75% capacity utilization. Close to 12% of firms see production slowing to less than 70% utilization, whilst 18% of firms were unsure as outlooks remain clouded. Only 6% anticipate 100% capacity utilization.
