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Highlights
Chicago business is up a bit this month, but not much and the good news does not include new orders. MNI Chicago index is up 5 tenths to 50.4, slightly above breakeven 50 to indicate slight month-to-month growth in general activity. The gain is led by growth in employment, where trends in this report are solid, and growth in production which has also been a solid center of strength in this report. Backlog orders are down for a fourth straight month, but just barely.
Now the bad news. New orders show significant monthly contraction, down more than 5 points to a 45.3 level that shows the most abrupt rate of monthly contraction of the recovery -- since June 2009. This is also the second sub 50 reading of the last 3 months. There's no indication where November's trouble in new orders is centered but it does raise the question whether it's tied to Hurricane Sandy which heavily disrupted this month's activity in the Mid-Atlantic region. Perhaps more ominously than Sandy, the dip in orders may be tied to the fiscal impasse in Washington.
Other details show that companies in the sample, which in this report come from all sectors of the economy, are working down their inventories. Deliveries are showing their steepest delays since early in the year when business was much busier and when many readings, including the main index, were trending solidly above 60. Commentary does not suggest that the delays are due to Hurricane Sandy.
The weakness in the new orders component isn't slowing down the Dow which is moving to opening highs following the report. But unless reversed in December, a downward turn for new orders points to a weak start to 2013, at least for the Chicago area.
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