Chicago Fed National Activity Index Rebounded Less Than Forecast in September
THE TAKEAWAY: Chicago Fed National Activity Index Rebounded Less Than Estimates in September> Production Sector Improved and Housing Sector Remained Weak> U.S. Dollar Mixed
The Chicago Fed National Activity Index, a weighted average of 85 economic indicators, improved to minus 0.22 in September from a minus 0.59 revise in August, according to Federal Reserve Bank of Chicago gauge today. The print missed consensus forecast of minus 0.10 from Bloomberg survey. A negative index reading pointed to a below-trend growth and lessening pressures on future inflation. The three-month average, which provides a more consistent picture of national economic growth, moved up to minus 0.21 from Augusts’ minus 0.28. Despite of remaining in negative territory for the sixth straight month in a row, three-month average figure has not signaled a possible recession in the near future. The August monthly index was revised downward to minus -0.59 from an initial estimate of minus 0.43.
Chicago Fed National Activity Index: January 2010 to Present
Prepared by Trang Nguyen
Of 85 economic indicators that constructed the Chicago Fed national index, thirty-nine made positive contributions while forty-six made negative contributions. Fifty-six indicators picked up from August to September, while twenty-seven indicators worsened and two were unchanged. Production-related indicators made a positive contribution of 0.02 to September’s reading with 0.2 percent gain in industrial production and 0.4 percent advance in manufacturing production. Consumption and housing sector slightly improved to minus 0.3 from minus 0.38 in August, in which rise in housing starts offset decline in housing permits. Sales, orders and inventories category add 0.02 to the index after contracting 0.03 in August.
USD/CAD 1-minute Chart: October 24, 2011
Charts created using Strategy Trader– Prepared by Trang Nguyen
Foreign exchange trading crowd show mixed reactions in the greenback following the release. As can be seen from the one-minute USDCAD chart above, the currency pair increased about 15 pips from 1.0055 to 1.0070 after five minutes. Then, the currency fell back to 1.0050 after twenty five minutes. At the times this report was written, the greenback traded at C$1.00598. Obviously, the Chicago Fed national index reading today reinforces the concerns about the slow recovery as well as deteriorated employment and housing conditions in the United States. The figure also somewhat fuels the speculation on the third round of quantitative easing that helps boost economic growth and support a sagging mortgage market as well.
--- Written by Trang Nguyen, DailyFX Research Team for DailyFX.com
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