Economy
Business Activity Softens in May
Written by Sandy Williams
May 31, 2019
The MNI Chicago Business Barometer gained 1.6 points in May to register 54.2. Survey responses showed softening in both manufacturing business activity and confidence. The three-month average for the Index slipped to a two-year low, said MNI Indicators.
Production and new orders rose in May, but not enough to make up for weaker levels in April. Production matched its three-month average, but was well below its 12-month average.
Weaker demand caused backlogs to contract for the second time this year. Inventories grew after three months of drawdown and seem to be returning to normal levels, said MNI. Supplier delivery times expanded at a slower rate than in March with some participants commenting on delays at rail and port hubs. Factory gate prices increased slightly after falling by double digits in April.
In a special question for May, 40 percent of firms said they were adversely impacted by supply side issues, pointing at tariffs and delays adding to costs and reducing competitiveness.
“This was the second increase in business sentiment this year, with firms having longer order books and thereby raising production. However, they kept employment close to the neutral level amid a lack of adequate skills and volatility in demand,” said Shaily Mittal, Senior Economist at MNI.
“There is no getting away from the general softness in the data. Indicators are significantly below their last-year averages but are moving towards their long-term means, implying that if business conditions are not as bright as they were, they are not bad either,” added Mittal.
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Sandy Williams
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