Chicago Fed Activity Index Improves

December was a weak month for the U.S. economy but a little less weak than November, based on the national activity index which improved to minus 0.22 from minus 0.36 (revised lower from minus 0.30). The improvement is centered in the production component as contraction in industrial production eased to minus 0.4 percent from November's very deep minus 0.9 percent. Other components were steady with sales/orders/inventories and consumption & housing both slightly negative. The only component in positive ground is employment, unchanged in the month at a solid plus 0.12. Despite the improvement in December, the 3-month average fell to minus 0.24 from minus 0.19 in November. This report is a reminder that economic activity is subdued which is a major factor, aside from low oil and commodity prices, holding down inflation.