The Chicago Federal Reserve Bank said that manufacturing activity in its District continued to improve, expanding for the third straight month. The Midwest Manufacturing Index (MMI) increased from 96.7 in August to 97.0 in September to 97.4 in October. The September and October data were new in this report, which was delayed one month due to the government shutdown. After a brief pullback in July, the MMI has risen 2.1 percent over the past three months.
Taking a longer view, manufacturing output in the Midwest has risen 5.7 percent year-over-year. This suggests that production growth in the Chicago Fed region has increased much stronger that what we see nationally, with manufacturing production up 3.3 percent over the past 12 months in Federal Reserve data.
The healthier output growth stems largely from strength in the auto sector, which has expanded by a whopping 8.7 percent at the annual rate. After slowing down in July due to retooling for the new model year, production has mostly expanded since then. There was a slight decline in October (down 0.2 percent), but output has increased 1.6 percent over the past four months. (I went back to June for this comparison to take the large swings in July and August out of the calculation.)
Meanwhile, other components of the manufacturing sector has also grown strongly, with steel output up 5.9 percent and machinery production up 4.5 percent over the past 12 months. The “resource” sector was up 1.7 percent year-over-year. Components of the resource sector, according to the Chicago Fed, include food, wood products, paper, chemicals, and nonmetallic mineral products. Over the past three months, the steel and machinery sectors’ production rose 2.2 percent and 2.3 percent, respectively. However, resource sector output declined 1.2 percent.
Chad Moutray is the chief economist, National Association of Manufacturers.
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