Chicago Fed National Activity Index Beats High Forecast

The big and unexpected 1.1 percent jump in the manufacturing component of the industrial production report gave a major boost to December's national activity index which, at 0.27, easily beat both the consensus and high forecast. The production component of December's report contributed 0.22 points to the index vs a downward revised 0.02 in November. Turning to sales, orders, and inventories, November's strong 0.12 point contribution compares with a zero contribution in December as new orders in ISM's manufacturing report slowed sharply.

Employment's contribution was steady at 0.11 vs 0.10 in November as the 312,000 surge in payrolls was offset by a 2 tenths rise in the unemployment rate to 3.9 percent (a rise, however, that reflected the welcome entry of new candidates looking for work). Consumer and housing pulled the index down by 0.06 points vs a 0.03 point negative pull in November.

Note that the government shutdown and related delay of many economic reports had only a limited impact on today's results as 45 of 85 indicators had been published which is only moderately lower than usual for any month's first report.