The National Activity Index from the Chicago Federal Reserve Bank improved from -0.34 in June to -0.13 in July. While the composite figure was higher, it has also been negative for five consecutive months. This was also true for the three-month moving average, which was -0.21 in July. This suggests that the U.S. economy remains below its historical trend, with sluggish growth and uncertainty weighing heavily on the market. While there were increases in some categories – such as consumer spending and housing – they continue to be a drag on the overall index.

Manufacturing, on the other hand, was one of the areas where the improvement in production led to a positive contribution to the index. The 0.6 percent increase in industrial production, which was announced last week, helped to add 0.12 percentage points to the index in July, up from +0.01 in June. We saw a similar conclusion with the Conference Board’s Coincident Economic Index, which measures current activity. (Falling new orders helped to dampen growth in its Leading Economic Index, which is more widely-cited.)

Overall, this data suggests that the national economy remains weak, even with some modest improvements in some sectors. Manufacturers continue to expand, but there is also a level of uncertainty there regarding the future direction of the economy. The National Activity Index does not suggest that a recession is possible (yet), as the three-month moving average is still above the -0.70 threshold. However, it does indicate that there remain some significant headwinds that are dampening overall growth.

Chad Moutray is chief economist, National Association of Manufacturers.

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