National Activity Index Much Lower-Than-Expected

A warm weather drop in utility output is a major factor behind a much lower-than-expected reading for the national activity index which came in at minus 0.29 vs Econoday expectations for plus 0.25 in February. The headline's production component fell to minus 0.21 from January's plus 0.29, pulled down by a 9.3 percent decline in utility output as well as a 9.9 percent decline in the struggling mining component, both masking a respectable 0.2 percent gain in the report's most important component, manufacturing output. But there is also weakness in the employment component which contributed only plus 0.03 to the February composite vs January's plus 0.19, here reflecting a lower contribution from employment expansion in the household survey (530,000 vs January's 615,000). A smaller negative comes from the personal consumption & housing component, at minus 0.09 vs minus 0.05, with a fractional drag coming from the sales/orders/inventories component, at minus 0.03 vs minus 0.02. The decline in utility output is a one-time event, pointing to a bounce for the February report.

Recent History Of This Indicator:
Both the employment report and the manufacturing component of the industrial production report showed strength in February and are expected to support the national activity index which is expected to come in at plus 0.25. This would be low by historical standard but not by recent standards.