Chicago Fed National Activity Index Lower On Production Pull-Back

Deep contraction in production pulled down the national activity index in July to minus 0.36 versus an upward revised 0.03 in June in what now is a rare gain for this index. The 3-month average, at minus 0.14 in July, has fallen for six straight months in a row and offers a counterpoint to GDP data which have been very solid this year.

Production-related indicators, reflecting 0.2 and 0.4 percent declines in industrial production and manufacturing production, pulled the index down by 0.25 points in July. These declines speak to the effects of slowing global demand and the slowdown in export demand. Personal consumption & housing was the next greatest negative at minus 0.06 points with sales, orders & inventories close behind at minus 0.05 points. Employment is another major component and it failed to provide positive support, down 0.01 in the month and reflecting a still solid but slower rate of payroll growth in the month.

This index represents a wide roundup of prior indicators based on which and in contrast to many individual indications on the economy suggests that 2019 has been a poor year for the economy.