U.S. Economy Picked Up Pace in September — Chicago Fed

By Joshua Kirby

U.S. economic growth picked up pace in September as production increased, data from the Federal Reserve Bank of Chicago showed Monday, suggesting activity remains resilient as fears of a severe slowdown ease.

The Chicago Fed National Activity Index rose to 0.02 in September, improving from a downwardly revised minus 0.22 reading in August. A reading above zero suggests economic activity is expanding at a slightly quicker rate than its average historical trend.

The CFNAI index, designed to gauge overall economic activity and inflationary pressures, is composed of 85 economic indicators from four broad categories of data: production and income; employment, unemployment and hours; personal consumption and housing; and sales, orders and inventories.

All four categories improved in September, and two made a positive contribution to the overall index, the Chicago Fed said. Production, including manufacturing, contributed 0.03 points, swinging from a negative reading the previous month, while employment-related indicators also turned positive.

Sales, orders and inventories meanwhile rose close to a neutral reading in September, at minus 0.01, and the personal consumption and housing category booked a similar improvement.

The CFNAI diffusion index--which captures how much the change in the monthly index is spread among the 85 indicators over three months--also rose to a positive reading of 0.05 from minus 0.15 in August. The index's headline three-month average rose to a neutral value, compared with minus 0.14 in August.

Both indicators suggest that the U.S. economy expanded at a faster rate in September, as they climbed further above the respective minus 0.35 and minus 0.70 values historically associated with economic growth.

The uptick in U.S. activity comes as fears of a lasting slowdown ease. Economists now tend to think the country will avoid recession, that the Federal Reserve will stay away from any further rate increases, and that inflation will keep falling, according to The Wall Street Journal's latest quarterly survey published last week.

Write to Joshua Kirby at joshua.kirby@wsj.com; @joshualeokirby

(END) Dow Jones Newswires

October 23, 2023 08:44 ET (12:44 GMT)

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