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Economic Growth Below Trend In October, Chicago Fed Says

The latest reading from the Chicago Federal Reserve's National Activity Index shows the U.S. economy grew below its historical trend in October, with all of the four broad categories of indicators making negative contributions to the index. The Chicago Fed said the index came in at -0.31 last month, slightly bet

The latest reading from the Chicago Federal Reserve's National Activity Index shows the U.S. economy grew below its historical trend in October, with all of the four broad categories of indicators making negative contributions to the index.

The Chicago Fed said the index came in at -0.31 last month, slightly better than the -0.38 in September. The three-month moving average declined from –0.15 in September to –0.19 in October. (A reading below zero is associated with below trend economic growth.)

Production-related indicators made a negative contribution of –0.14 after making a negative contribution of –0.35 in September. Total industrial production rose 0.2 percent in October after falling 0.6 percent in the previous month. Manufacturing capacity utilization decreased slightly from 81.0 percent to 80.7 percent in October.

Employment-related indicators made a negative contribution of –0.12 to the October report following a neutral contribution in the previous month. Nonfarm payroll employment increased 92,000 in October, which was smaller than the 148,000 gain in September. The unemployment rate edged down from 4.6 percent to 4.4 percent in October.


Consumption and housing indicators made a negative contribution of –0.05. Housing starts fell 14.6 percent during the month and made a negative contribution to the CFNAI. Residential building permits fell 6.3 percent, but remained above historical norms, and continued to make a positive contribution. The sales, orders, and inventories category made a small negative contribution of –0.01 to the October index.

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Source: The Federal Reserve Bank of Chicago

Thirty-six of the 85 individual indicators made positive contributions to the index in October, while 48 made negative contributions and one was neutral. Forty-four indicators improved from September to October, while 41 indicators deteriorated. Of the improved indicators, 17 made negative contributions.

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