The MNI Chicago Business Barometer surged to an 11-month high of 66.4 in November, up 8.0 points from October's 58.4.
Business activity recorded its most impressive performance so far this year in November, ending a three-month run of declines. Although broad-based, with increases across all five of the Barometer's subcomponents, resurgent orders, solid output and higher unfinished orders were the month's key drivers.
This month's result means the Barometer has signalled expansion, sitting above the neutral 50-mark, for 33 consecutive months. Moreover, the headline index has registered above-60 for all but three of the past 15 months.
Compared to a year ago, when export-driven growth spurred global activity, the Barometer is up 1.2%, returning to growth after two months of decline.
Driving the November rise were soaring orders and higher output. After easing in each of the last two months, November saw New Orders jump to the highest level since May 2014. Production, meanwhile, rose for a second straight month, settling at a three-month high. Some firms said that while they were seeing increased orders in November, there were also demands from customers for earlier delivery on existing orders.
Order Backlogs, which reversed October's decline and hit a four-month high, also helped propel the overall index higher. Firms reported labor struggles continuing to restrain the ability to tackle backlogs over what is considered the busiest time of the year for many firms.
Meanwhile, supply-side issues continued to weigh on firms. The Supplier Deliveries indicator rose to its highest level since April 2004 in November, with some firms citing delays in sourcing deliveries from low-cost, offshore countries.
Having used the previous two months to accumulate stock, firms ate into these levels in November with the Inventories indicator slipping to a three-month low. In recent months, firms reported that they accrued stock in preparation for the upcoming festive season or to protect themselves in anticipation of higher prices fueled by any further trade disruptions.
Building on October's rise, the Employment indicator strengthened further in November, hitting a three-month high and moving further clear of the neutral-50 mark.
This month's special question built on this, asking whether firms saw labor issues negatively impacting their business in the New Year. The majority of firms, 42.6%, were optimistic that this would not be the case but a sizeable 36.2% did foresee issues manifesting, supplemented by the remainder who said they were unsure.
Prices data, meanwhile, continued to signal elevated input expenses across firms. Prices Paid, despite moderating in November, are still hampering firms' operations. Some firms reported an increase in costs across a range of goods while others said they were in the process of renegotiating contracts.
"The MNI Chicago Business Barometer clipped a run of three consecutive declines in emphatic style in November, boosted primarily by resurgent orders -- stronger than typically seen at this time of year and enough to push the Barometer to its best level since last December," said Jamie Satchi, Economist at MNI Indicators.
"However, many firms reported seeing the effects of higher China tariffs on their invoices for the first time, and voiced concern that business could be stifled going forward," he added.
The survey period ran from Nov. 1 to Nov. 20.
