July 2018 Chicago Fed National Activity Index

National output growth moderated in July 2018 according to the Federal Reserve Bank of Chicago’s National Activity Index.  This comprehensive indicator managed to hold above zero, reaching 0.13 to start the third quarter. The prior two months were erratic; May declined 0.45 and June was upwardly revised to positive 0.48 (originally 0.43).  Despite two back-to-back positive months, the three-month moving average fell to 0.05, the lowest level since September of last year.

Contributions from the four major categories were mixed but mostly weaker.  Production-related indicators declined to +0.05 from +0.45 in June; industrial production edged higher by just 0.1 after surging 1.0 to end the second quarter.  Sales, orders, and inventories contributed just +0.03, decelerating from +0.06 a month earlier.  Employment-related indicators were the sole improving category, rising from +0.03 to +0.12 as the falling unemployment rate boosted this portion of the report.  Finally, personal consumption and housing deteriorated marginally, falling from -0.06 to -0.07 in June. 

As is normally the case, this iteration of the CFNAI was a mixed bag, but it skewed negatively relative to a month earlier.  Just 36 of the 85 individual indicators provided a positive contribution, while 49 had a negative impact on the total.  Thirty-four indicators improved, but 51 deteriorated.  Of those improving, 13 still made negative contributions.

While the release was not very enthusiastic, there is not enough information in this single iteration to suggest some sort of wholesale change in the economy’s trajectory.  For now, the slope of America’s output remains positive.  Economic growth continues moving forward, albeit at a moderately slower pace as of late.