Economic activity in the U.S. picked up pace last month as the economy appeared to grow slightly faster than its long-run trend, the Federal Reserve Bank of Chicago said Tuesday.
The Chicago Fed National Activity Index, which weighs 85 economic indicators to compose a picture of overall economic activity, moved into positive territory in November. The index rose to 0.03 percent from negative 0.66 percent n October.
The index is designed so that positive values indicate above-trend growth and negative values indicate below-trend growth.
The 85 indicators are grouped into four broad categories: 1) production and income; 2) employment, unemployment, and hours; 3) personal consumption and housing; and 4) sales, orders, and inventories. All four improved in November.
The employment-related indicators made a positive contribution in November, driven in part by the decline in the unemployment rate, after being a drag in October. Likewise, the personal consumption and housing indicators went from a drag in October to boosting the index in November.
The contribution of the sales, orders, and inventories category were slightly negative in November but less so than a month earlier.
The production-related indicators were neutral in November after being negative in October.
The improvement in the index is the latest sign that the slowdown in economic activity in October may have been short-lived, suggesting that the economy may not have slowed as much as expected in the fourth quarter. Forecasts that the Fed is likely to start cutting rates as early in March depend, in part, on economic growth slowing.