Chicago Business Barometer declines

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The MNI Chicago Business Barometer slipped 1.9 points to a three-month low of 63.6 in August, down from July’s 65.5, the Institute for Supply Management reported on Friday.

The index is still 6.9% higher on the year and continues to signal robust business conditions, ISM said.

Companies operations continued to grow at a healthy pace in August, despite dropping for the first time in five months. A softening in supplier deliveries, order backlogs and employment offset gains in production and new orders, ISM said.

“The MNI Chicago Business Barometer continues to signal solid business sentiment, despite easing for the first time in five months, with growth in output and demand holding up well,” said Jamie Satchi, Economist at MNI Indicators. “Inflationary pressures look set to continue, potentially bleeding into consumer prices, with over 60% of firms reporting that they have passed on higher input costs to customers in recent months, and others foreseeing doing so in the near future.”
Firms continued to expand their workforce in August, despite the employment indicator slipping from July’s four-month high. The indicator has remained above the neutral threshold of 50 for the past 10 months in a row, the longest stretch since April 2015.

Demand and output inched higher in August, though broadly unchanged from their July levels. Despite seeing only a minor change in August, the new orders indicator is up 6.4% on the year while the production indicator has posted a 9.1% rise on the year, according to the ISM.

Firms’ productive capacity continues to be restrained by elevated input prices. While the prices paid indicator declined in August, it is still above the 80-mark -- only the second time this has happened since 2008.

Firms continued to report elevated prices across a wide range of materials, from steel to resin, with many citing allocation issues stemming from ongoing trade disruptions as a key reason, ISM reported.

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