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Chicago Fed index falls, but growth remains above historical average

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Chicago Fed index falls, but growth remains above historical average

The Fed Bank of Chicago’s national barometer of economic activity eased last month, a sign the economy would need more time to regain momentum after inclement weather weighed on the recovery efforts.

The Chicago Fed National Activity Index fell from 0.53 to 0.20 in March, official data showed. The index’s three-month moving average rose from -0.14 to neutral, a sign economic activity was back in line with historic trends. A reading above zero suggests economic growth is trending above the historical average. A negative reading suggests below-average economic growth. The monthly indicator is used to measure overall economic activity and related inflationary pressure.

A slowdown in production was the biggest factor behind the monthly decline. The Chicago Fed’s barometer of production declined from 0.54 to 0.21. The index was in line with previous data showing overall production stalled last month. US industrial production increased 0.7 percent last month after rising 1.4 percent in February, while manufacturing output increased 0.5 percent in March after rising 1.4 percent in February.

On Wednesday Markit Group will release data on US manufacturing PMI. The April reading is expected to show a slight improvement over the previous month.

The barometer of sales fell back into negative territory last month, dipping from 0.08 to -0.02. The other two major categories showed growth, data showed. The barometer of employment from 0.07 to 0.14, while the gauge of consumption increased from -0.17 to -0.17.

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