–Employment Recovers
–Dec Chicago Biz Barometer Reiterates Nov’s Vibrancy
–New Orders Optimistic, Outpaces Production for 2nd Month
–Order Backlogs Increase for Third Straight Month
–Prices Paid Rose, Production And New Orders Remain Buoyant

By Alyce Andres-Frantz

CHICAGO, Dec 29 (MNI) – The December Chicago Business Barometer
reiterated the vibrance seen in November, suggesting the U.S. economy is
well poised headed into the new year.

The Chicago Business Barometer was roughly unchanged in December,
falling only 0.1 to 62.5 from November’s seven-month high.

Jack Bishop, founder of Kingsbury International and the original
developer of the Chicago Business Barometer noted, “The Chicago Business
Barometer stabilized well above its long-term average of 54. The USA
economy appears well-positioned as 2012 becomes a reality.”

The Business Barometer’s short term trend, otherwise known as the
three-month moving average, rose 0.8 to 61.2, its highest level since
June 2011. The December reading was improved from the year’s low of 56.5
in August, but far from the year’s high of 71.2 set in February.

Slowing in the rate of expansion of key indexes such as Production
and New Orders was small. Production declined 1.1 points to 66.2
compared to November’s seven-month high of 67.3. December New Orders
slowed by 2.2 points to 68.0 relative to November’s 8-month high of
70.2.

Meanwhile, Order Backlogs rose 2.8 in December to 57.9.

“December New Orders struck an optimistic note in that they
outpaced a solid Production reading for the second consecutive month.
That strength was echoed by the third consecutive increase in the rate
of expansion of Order Backlogs,” Bishop said.

Moreover, December Prices Paid expanded 5.5 points to 65.7.

“Given the continued strength in Production and New Order activity,
the expanding number of firms seeing increases in Prices Paid is further
confirmation of a strengthening economy,” Bishop said.

The Prices Paid index, however, will close well below the frothy
highs of 83.4 at the end of the first quarter when energy prices soared
due to unrest in the Middle East.

Inventories, after leaping in September, continue to expand at a
slower rate of 52.2 in December versus 53.6 in November.

Despite a modest slowing in the rate of expansion in Production,
Employment expanded 1.7 points to 58.6 after a large 5.4 point drop in
November.

“In fact, the Employment Index was consistently lower than the
Production Index for the past two years, with a single exception (May
2011),” Bishop said.

“A reluctance to add employees, and/or commit capital to
modernization of/addition to capacity is consistent with leadership
still wary after the Great Recession,” Bishop said.

Supplier Deliveries index increased 0.4 to 57.0 “indicating
slightly slower deliveries,” Bishop said adding that the index ended the
year below the yearly average in spite of consecutive increases in the
last quarter.

“While the Supplier Deliveries indicated a slight slowing in
deliveries, the Buying Policy measures provided a more nuanced
perspective,” Bishop said. “Each of the future oriented Buying Policy
measures indicated expectations of faster deliveries.”

“The sensitive, MRO Supplies Index, dropped a significant 1.5 days
to 9.8 days. However that increase was outpaced by the more than 8 day
drop in the days to source Production Materiel,” to 26.9, “the minimum
for the year.”

“Even the less volatile lead-time for Capital Equipment fell a bit
over six days,” to 113.7, Bishop said.

“One explanation for the divergence in a different supply numbers
may lie in the expectation that supply-chain bottlenecks are in the
process of being cleared up,” Bishop said.

–email: aandres@marketnews.com

** Market News International Washington Bureau: 202-371-2121 **

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