Chicago Business Barometer Indicates Notably Slower Growth In April

Indicating a slow start to the second quarter, MNI Indicators released a report on Friday showing that growth in Chicago-area business activity slowed by much more than expected in the month of April.

MNI Indicators said its Chicago business barometer slumped to 50.4 in April after surging up to 53.6 in March.

While a reading above 50 indicates continued growth, the barometer had been expected to show a much more modest drop to 53.4.

The bigger than expected drop by the barometer was led a decrease by the new orders index, which fell to its lowest level since last December.

The order backlogs also saw a double-digit decline, while the employment index moved back into contraction after indicating growth in the previous month.

On the other hand, the production index saw a small increase, and the supplier deliveries index jumped to its highest level since October of 2014.

The prices paid index also saw a significant jump, climbing back into expansion for the first time in nine months.

The increase reflected a recovery in the oil price as well as higher prices for some raw materials such as plastic and paper products

Chief Economist of MNI Indicators Philip Uglow said, "This was a disappointing start to the second quarter, with the Barometer barely above the neutral 50 mark in April."

"Against a backdrop of softer domestic demand and the slowdown abroad, panelists are now more worried about the impact a rate hike might have on business than they were at the same time last year," he added.

In a special question, MNI Indicators found that 28.6 percent on panelists believe an interest rate hike in the next months will have an impact on business.

Only 21.2 percent said they expected to see a rate hike impact business activity when the same question was asked last April.