Economic Report: Strong hiring lifts Chicago Fed’s national economic measure, as housing cools

The numbers: A strong job market largely accounted for the acceleration in a broad measure of the U.S. economy from the Chicago Federal Reserve in October.

The Chicago Fed’s index of national economic activity registered at a positive 0.24 last month, up from positive 0.14 in September.

The volatile nature of the monthly reading puts added emphasis on following the index’s less-volatile, three-month moving average. It ticked up to positive 0.31 in October from positive 0.30 in September.

The Chicago Fed index is a weighted average of 85 economic indicators, designed so that zero represents trend growth and a three-month average above 0.70 suggests an increasing likelihood of a period of sustained increasing inflation. Fifty of the 85 individual indicators made positive contributions in October, while 35 made negative contributions. Fifty-one indicators improved from September to October, while 33 indicators deteriorated and one was unchanged.




The details: Employment-related indicators contributed positive 0.19 to the national index in October, up sharply from positive 0.05 a month earlier. Economists said October’s payrolls report, which was released in early November, showed all-around strength, highlighting wages climbing 3.1% in the past 12 months as they called the data consistent with further tightening by the Federal Reserve. The Fed is expected to raise interest rates in December.

Production-related indicators, meaning factories, contributed a positive 0.06 in October, cooling from a positive 0.09 in September. And as attention remains fixed on housing market vulnerabilities, the contribution of the personal consumption and housing category to the CFNAI ticked down to negative 0.05 in October from negative 0.04 a month earlier.

Market reaction: U.S. stock indexes

SPX, +1.23%

 were expected higher, tracking rebounding oil prices.

Rachel Koning Beals is a MarketWatch news editor in Chicago.

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