In the wake of the vast majority of panel members’ reporting unchanged
conditions, the December current conditions component narrowed to 50 points
after hitting 58.8 last month. An undercurrent of unease and uncertainty
rippled through many comments, touching on trade concerns, weakness in the
industrial sector, and the impeachment drama. However, similar to last month’s
report, the quantitative results were probably best reflected in the remark
noting, “business conditions [are] steady but at a high level.
After two months of straddling the line between signaling growth or
slowdown, the EBCI current conditions component moved firmly into growth
territory with a nearly 9 point increase from last month’s score to 58.8.
Although the share of “better” responses increased, the preponderance of
panelists noted unchanged conditions, and that mix is reflected well in the
comments. The tenor of those remarks was largely unenthusiastic but somewhat
positive-leaning and may be best summarized by one respondent’s note that
conditions are “steady but at a strong level.”
The current conditions reading held steady at 50 this month, equaling
September’s index value and once again teetering on the line indicating
expansion. One noteworthy change in the distribution of responses was a decline
in the share of those who reported worse conditions in October compared to last
month. Some panel members expressed lingering concerns about the political and
policy environment as well as the general direction of the economy. Despite
such reservations, other commenters pointed to steady or even improved activity
in their business sectors.
The current conditions component crept up to growth territory this
month, bouncing back from August’s 41.2 to reach an index value of 50 in
September. Although a preponderance of panel members still reported unchanged
conditions, the share of responses indicating better conditions edged up
several percentage points. With only brief exceptions, this measure has
remained largely range-bound in the low 50s to upper 40s since mid-2018.
Commenters noted weakness in both long-term and short cycle spending alongside
reports of steady to strong growth.
The nearly 12 point decline in the current conditions component, which
now stands at 41.2 for August, was largely driven by a drop in the share of
respondents that reported better conditions, coupled with an increase of
similar magnitude in the proportion that noted unchanged conditions. The
current component’s relapse to a reading of less than 50 was accompanied by
continuing concerns about the uncertain nature of trade and tariff policy
intermixed with reports of strong markets in some sectors.
As one commenter noted, with “[n]o real explanation” readily available
for the better than expected business conditions reported by the EBCI panel,
the current conditions component leapt by more than 18 points from last month’s
level to move back into expansion territory at 52.8 points in July. Although
trade policy continued to weigh on business confidence, and weakness in the
industrial sector was noted as well, a preponderance of panelists reported
better conditions this month, and the share of those indicating worse
conditions dropped sharply.