The numbers: A much-weaker-than-expected February hiring total, a potentially one-month surprise within a still-strong job market, soured the latest broad-based measure of the U.S. economy from the Chicago Federal Reserve.
The Chicago Fed’s index of national economic activity registered at a negative 0.29 in February down from an upwardly revised negative 0.25 in January, the central bank branch said Monday. December’s reading was just in positive territory, capping a string of consecutive positive readings from June through the end of last year.
The volatile nature of the monthly data puts added emphasis on following the index’s less-volatile, three-month moving average. It decreased to a negative 0.18 in February from a neutral reading in January. The bank also warned that the partial government shutdown earlier this year has complicated its index creation on a temporary basis.
The Chicago Fed index is a weighted average of 85 economic indicators, designed so that zero represents trend growth and a three-month above 0.70 suggests an increasing likelihood of a period of sustained increasing inflation. Thirty-eight of the 85 individual indicators made positive contributions in February, while 47 made negative contributions. Thirty-seven indicators improved from January to February, while 48 indicators deteriorated.
The details: Employment-related indicators contributed a negative 0.10 to the Chicago index in February, down from positive 0.07 in January. The economy added just 20,000 new jobs last month, the smallest gain since September 2017, the government said in its release out earlier this month.
The number of new nonfarm jobs created last month was well below the 172,000 that MarketWatch had forecast, but the slowdown was probably exaggerated by heavy snow and other seasonal oddities that are unlikely to persist, at least according to most economists. The U.S. has been adding more than 200,000 new jobs a month for the past year.
Meanwhile, the contribution of the personal consumption and housing category to Chicago Fed’s index ticked down to negative 0.06 in February from negative 0.03 a month earlier. Production-related indicators, primarily factories, contributed a negative 0.16 in February from an upwardly revised negative 0.29 in January.
Market reaction: U.S. stock indexes
SPX, -0.25%
indicated a weaker start ahead. The Chicago Fed report largely fits in with a barrage of softer economic figures from the U.S. and abroad that raised stock market concerns, sending Wall Street to its worst day on Friday since the start of the year.
Source : MTV
