Chicago Fed National Activity Index Abruptly Slows

A drag from employment made for abrupt slowing in the national activity index which came in at plus 0.10 percent for March vs February's upward revised and very strong 0.98. Employment, one of four components in this report, pulled the headline index down 0.70 points in March reflecting a steep slowing in nonfarm payrolls to 103,000 vs February's 326,000. The production component also slowed March's results but still contributed 0.14 points to the headline index. Sales, orders, inventories contributed slightly less to March while personal consumption & housing, which has been weak, improved slightly and held down the March index only fractionally.

Winter months can often be bumpy given the outsized effects of seasonal adjustments during this period. But looking at the 3-month average shows steady growth for this index, at 0.27 and only slightly lower than February's 0.31. Watch Friday for the first estimate on first-quarter GDP where the consensus is looking for modest-to-moderate strength.