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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 fell on the month, with only Production and Supplier Deliveries finding room to grow.
While output levels rose in April, driving the upward move in the Barometer, order book growth continued to weaken. The Production indicator ended a run of three consecutive falls, rising to the highest level since February. The New Orders indicator, on the other hand, extended the downward momentum shown since the turn of the year, hitting a 15-month low in April. The two indicators account for exactly 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. 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. A wide range of inputs were reported as more expensive on the month and some firms felt uncertainty was driving prices higher.
This month’s special question asked firms to assess the impact of the government’s recently imposed tariff programme on their business. The majority of firms, just over 50%, deemed its impact to be insignificant compared to just under a third who foresaw 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 threemonth 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.
“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.
