Growth in Chicago-area business activity decelerated for the third straight month in October, according to a report released by MNI Indicators on Wednesday.
MNI Indicators said its Chicago business barometer fell to 58.4 in October from 60.4 in September, although a reading above 50 still indicates growth. Economists had expected the index to edge down to 60.0.
The bigger than expected drop by the business barometer came as a decline in order book growth and unfinished orders more than offset a rise in output, delivery times and employment.
“The MNI Chicago Business Barometer continued to revert back towards trend-levels in October, cooling off after a hot and unsustainable run last year,” said Jamie Satchi, Economist at MNI Indicators.
He added, “Production continues to be restrained by issues between firms and their suppliers, reflected by Supplier Deliveries at a 14-year high, while the latest raft of tariffs on Chinese goods appears to be exacerbating uncertainty across firms.”
The report said the new orders index fell for the sixth time this year, hitting its lowest level since January of 2017. The order backlogs index also receded to a level last seen lower in April, when it slipped below the neutral mark for the first time in 13 months.
On the other hand, the output index increased marginally and the employment indicator rose for the first time since July.
MNI Indicators also said the supplier deliveries index reached its highest level in over fourteen years, with some firms attributing the increasing wait times to under-staffed suppliers.
The prices paid index remained locked in a historically elevated range, as some firms saw higher unit prices on invoices for the first time, on the back of further import tariffs levied on China, while others expect shortages to push prices higher over the coming months.