Chicago Fed National Activity Index Rises

Last week's big jump in industrial production together with July's strong employment report lifted the national activity index to plus 0.27 from June's revised plus 0.05. The 4-week average is improving but remains negative, at minus 0.10 vs minus 0.12 in June.

Of the four major components, production is the strongest in the report, contributing 0.23 to the index and reflecting July's 0.5 percent gain in manufacturing production and 4 tenths increase in manufacturing capacity utilization to 75.4 percent. The employment component contributed 0.09 to the index for a 4 tenths increase from June. The other two components, sales/orders/inventories and personal consumption & housing were steady, at plus 0.01 and minus 0.06 respectively.

The small dip for the personal consumption & housing component is no surprise given the month's weakness in retail sales. But even without strength in consumer spending, July proved to be a strong month for the economy.