National Activity Index Back At Expansion Best Reading

After slowing at the outset of the year, the national activity index -- led by manufacturing and employment -- is back at its expansion best, posting a 0.34 in April following a sharply upward revised 0.32 in March. The 3-month average is at 0.46 vs March's 0.23.

Production that includes a gain for manufacturing leads April's report, contributing 0.27 to April's index. Next with a 0.10 contribution is employment highlighted by the month's 2-tenth fall in the unemployment rate to 3.9 percent. Sales/orders/inventories made only a slight contribution while consumption & housing, reflecting monthly slowing in housing starts and housing permits, pulled down the index slightly.

This index still has a way to go before it begins signaling inflation risk, at least based on the Chicago Fed's methodology which has 1.00 as the overheating red zone. Note that revisions, given lagging data, can be extreme in this report with only 51 of 85 indicators included so far for April's initial reading.