The MNI Chicago Business Barometer followed up declines in both January and February with a hefty 4.5 drop in March, ending the first quarter of 2018 at 57.4 -- the lowest outturn in exactly a year and the first sub-60 outturn in seven months. It is the first time the Barometer has fallen in three consecutive months since October 2013, although with the caveat that this year's slide commenced after December's near-seven-year-peak.
Underlying growth remains robust. Although the Barometer fell back from the Q4 2017 result in Q1, it was still the second-best calendar quarter result since Q2 2014 and the best Q1 outturn in seven years.
As was the case in both January and February, it was the pace of production and incoming orders that led the March slide. Firms reported supply chain disruptions impacting their productive capacity while the pass through of higher input prices to consumers also weighed on demand. Production fell to the lowest level since October 2016 while New Orders slipped to a level last seen lower in January last year.
Looking forward, however, the majority of firms were optimistic activity would perk up again. Roughly half of all firms expect orders to come in stronger in Q2 compared to Q1, with some firms anticipating a pickup in construction activity or a boost from new product launches. On the other hand, just under a tenth saw orders receding further.
Input prices remain a pain for firms. March's increase in the Prices Paid indicator not only recaptured the bulk of the February ease but was enough to take the quarterly average to a near-
