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Key Points – October Report
The Chicago Business BarometerTM, produced with MNI, fell 3.9 points to 43.2 in October, the lowest level since December 2015.
The index slipped further into contraction with a second straight sub-50 reading. The survey points to further weakness in business activity, with the threemonth average falling further to 46.9.
Only two of the major components saw a monthly decline, although both New Orders and Order Backlogs fell sharply in October.
While demand weakened significantly in October -- New Orders declined to 37.0, its lowest since March 2009 -- Production bounced up to 46.8, although the indicator has been in contraction since July.
Order Backlogs saw the largest monthly decline, dropping by 13.6 points to 33.1. The index registered below the 50-mark for a second successive month after September’s level of 46.8.
Inventories rose to 47.1, marking the strongest reading since August, indicating that companies continued to run down their stock, albeit at a slower pace.
Employment registered a touch below the 50-mark in October, rising by 4.2 points to 49.8.
Prices at the factory gate cooled for the third consecutive month in October, dipping to 54.8. There was anecdotal evidence of lower steel prices, although tariffs offered some upside pressure.
October’s special question asked “What impact the latest interest rate cuts by the Federal Reserve have on firm’s business?” The majority (51.1%) expect no impact, while 31.1% state a positive effect.
The second question asked “How the governmentimposed tariffs will affect their firm’s business?” While 56.5% noted a little negative impact, 26% indicated a major negative effect.
