Chicago Business Barometer: Midwest Manufacturing Slows in December

The MNI Chicago Business Barometer conducted by the Institute for Supply Management showed Midwest manufacturing activity declined to 54.6 in December from 57.6. The results missed the median economist forecast, which was expecting a smaller decline to a reading of 57.0.

“Most respondents to our survey remain upbeat about the fate of their business as we head into 2017, buoyed by fresh hope of better things to come under the new administration. Hopefully, 2017 can build on the momentum generated in the latter stages of 2016.” said Jamie Satchithanantham, economist at MNI Indicators.

Readings above 50 point to expansion, while those below indicate contraction.

The decline in the MNI Chicago Business Barometer overall was largely fueled by a 6.7% decline in New Orders, which fell to 56.5. That reversed most of the gains in November that marked the fastest pace since June. Production also sliced off from the index this month, ending 2016 at the lowest level since October.

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Order Backlogs moved back into contraction and Employment held steady, remaining below 50 for the second month in a row. In fact, Supplier Deliveries was the only component to gain ground in December, even though the Inventories Indicator moved back into contraction. It is now sitting below the break-even mark for the eighth time this year, indicating firms are refusing to add to their stock as we approach the end of the year.

This month’s special question asked panelists how they expected the policies of President-elect Donald J. Trump to impact their business in 2017. Over half of total respondents expected their business to prosper, with many citing anticipated tax reforms and deregulation as positive for business. Only 9% said it would have a negative impact on their business.