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Chicago Purchasing Managers Index rose 7.0 points to 57.6 in November
The MNI Chicago Business Barometer rose 7.0 points to 57.6 in November from 50.6 in October, the highest since January 2015. The increase added momentum to the fourth quarter, with the three-month trend ascending to 54.1 this month, up from 52.1 in the three months to October.
Four of the five Barometer components increased, with only Employment falling. Although the Barometer has been volatile in recent months, the latest results are positive given that the Barometer was in contractionary territory in the same period last year.
The rise in New Orders contributed the most to the increase in the Barometer, increasing 10.7 points to 63.2 in November. Production also rose, regaining virtually all of October’s fall. Order Backlogs jumped out of contractionary territory, where it had been over the past three months, while Supplier Deliveries saw a smaller rise. Despite higher orders and output, demand for labor fell. Employment slipped back into contraction, making last month’s recovery short-lived.
This month’s special question asked firms how they expected business activity to fare in 2017. Most respondents expected businesses to do somewhat better than in 2016. Most respondents expected their business to grow less than 5% next year but there were many who were more optimistic and expected growth to be above 10%. The path of interest rates and the election outcome were said to be important factors that could impact activity in the coming year.
Companies increased their stock levels at the fastest pace since October 2015, with the Inventories Indicator moving back into expansion in November. Inflationary pressures at the factory-gate eased slightly after picking up last month. Prices Paid fell to 56.8 in November, though above the 12-month average of 52.2.
“The November reading for the Business Barometer marked the sixth month of expansionary business activity in the US. Strength in orders, a recovery in oil prices and the stronger dollar have all impacted businesses with varying degrees.”
“Respondents to our survey also remain optimistic about business activity in 2017 although the new government’s policies and the Fed’s approach towards monetary tightening would impact the course of business activity over the next year.” said Shaily Mittal, senior economist at MNI Indicators.
Posted: November 30, 2016 Wednesday 09:45 AM