Chicago Business Activity Unexpectedly Continues To Contract In March

(RTTNews) - Business activity in the Chicago area unexpectedly continued to contract in the month of March, according to a report released by MNI Indicators on Tuesday.

MNI Indicators said its Chicago business barometer edged up to 46.3 in March from 45.8 in February, although a reading below 50 continues to indicate a contraction.

Economists had expected the business barometer to show a more significant rebound to a reading of 51.5, which would have indicated modest growth.

With the much smaller than expected increase, the business barometer showed back to back sub-fifty readings for the first time since late summer of 2009.

Rough winter weather and strike action at west coast ports have recently weighed on the index, although MNI Indicators said the continued weakness in March points to a wider slowdown in business conditions.

Of the five components that make up the Chicago business barometer, the production index showed the biggest increase, climbing to 49.3 in March from 44.8 in February but remaining below 50.

MNI Indicators said the new orders and order backlog indexes showed more modest increases but also continue to indicate a contraction after suffering double-digit losses in February.

Meanwhile, the report also showed a modest increase by the employment index, which crept back above the key 50 level.

Philip Uglow, Chief Economist of MNI Indicators, said, "There was some expectation that the Barometer would bounce back in March following the sharp fall in February."

"Instead we are faced with a second consecutive sub-50 reading and the weakest quarterly outturn for more than five years," he added.

On the inflation front, the prices paid index indicated a faster contraction, as disinflationary pressures were still evident in March in line with lower oil prices.