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Chicago manufacturing slows in December

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Chicago manufacturing slows in December

While the closely-watched Chicago PMI fell for a second straight month, cautious optimism remains.

The December Chicago Business Barometer, issued by the Institute for Supply Management, softened to 59.1 from 63.0 in November, the second consecutive monthly decline following October’s surge to 65.9, which was the highest since March 2011.

“While activity dipped a little in December, businesses continued to report firm growth in Production and New Orders”

The moderation in December was led by a second month of slippage in New Orders and declines in four of the five components that comprise the Barometer.

In spite of December’s slowdown, the Barometer continued to point to reasonably firm growth and the three month average rose to the highest since May 2011. Chicago area purchasers continued to report an expansion in business activity, albeit at a slower rate in New Orders, Production and Order Backlogs.

Employment fell significantly to just above 50 in December.

Supplier Deliveries, the only component of the Barometer to expand at a faster rate, rose to the highest since June 2011. An ongoing lengthening in Supplier Deliveries was a concern among purchasers in December as it was viewed as a possible harbinger to continued growth.

Commenting on the MNI Chicago Report, Philip Uglow, Chief Economist at MNI Indicators said, “The Chicago Business Barometer finally turned a corner in 2013 having been in decline for the previous two years and ended the year with fourth quarter growth at the highest for more than two years.

“While activity dipped a little in December, businesses continued to report firm growth in Production and New Orders,” he added.

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