Manufacturing Pulls Down Chicago Fed National Activity Index

A drop in production pulled down the national activity index in August, which came in at minus 0.21 from a revised plus 0.26 in July. The 3-month average is at plus 0.07 vs July's revised plus 0.20.

The big negative in August was the 0.4 percent decline in the manufacturing component of the industrial production report, one that was likely skewed lower by timing issues for auto retooling. Consumption & housing also pulled down the main index, at minus 0.12 from July's minus 0.13.

The employment component fell to zero from July's plus 0.10 reflecting weak nonfarm payroll growth of 142,000. The component that had the best showing in August was sales/orders/inventories, at plus 0.08 vs plus 0.04 in July.

A bounce back in manufacturing shipments is a strong and favorable possibility for this report in September, as would be a bounce back for employment.