Chicago Fed Midwest Manufacturing Index

The Chicago Fed Midwest Manufacturing Index (CFMMI) increased 1.5% in August, to a seasonally adjusted level of 96.7 (2007 = 100). Revised data show the index was down 0.7% in July. The Federal Reserve Board’s industrial production index for manufacturing (IPMFG) moved up 0.7% in August. Regional output rose 4.0% in August from a year earlier, and national output increased 2.8%.

Production in three of the four regional sectors increased in August:

• Regional auto sector production rose 4.1%;
• Regional machinery sector production increased 0.8%;
• Regional resource sector output moved up 0.4%; and
• Regional steel sector output moved down 0.1%.

The region’s auto sector production rose 4.1% in August after falling 2.8% in July. The nation’s auto production increased 2.4% in August. Midwest automotive output was up 8.4% in August relative to its year-ago level, and national automotive output was up 4.8%.

The Midwest’s machinery sector production increased 0.8% in August after decreasing 0.4% in July. The nation’s machinery production increased 1.2% in August. Regional machinery output was up 1.5% in August from its year-ago level, while national machinery output was up 4.8%.

The Midwest resource sector’s output moved up 0.4% in August after increasing by the same percentage in July. The national resource sector’s output moved up 0.2% in August.

Production in the regional resource sector’s food, wood, paper, and nonmetallic mineral subsectors increased from July to August, while production in its chemical subsector decreased. Compared with a year ago, regional resource output was up 1.9% in August, and national resource output was up 1.2%.

The region’s steel sector output moved down 0.1% in August, following an increase of 1.3% in July. The nation’s steel output moved up 0.1% in August. Regional steel output was up 2.2% from its August 2012 level, and national steel output was up 1.6%.

— William A. Strauss • Senior Economist and Economic Advisor • 312-322-8151

The national Association of manufacturers reported as follows on Monday this week: “While manufacturing activity has accelerated of late from weaknesses seen in the spring and early summer, data released last week showed some easing in new orders and the overall pace of growth. Hiring continues to be positive, but sluggish. Along those lines, manufacturing surveys from the Kansas City and Richmond Federal Reserve Banks also noted some disappointing results for September, pulling back from increases observed in August. In addition, durable goods sales edged higher in August, but new orders data generally disappointed, particularly when you look at the broader market.”

SMU Comment: The 3MMA of the composite index was the highest since June 2008 when the recessional slide was well underway (Figure 1). In the single month of August the automotive component of the index was the highest since November 2007 but its 3MMA has been more or less flat for six months. It will be two more months before we know if the August surge was real. After increasing in February, the 3MMA of the steel component has been more or less flat for six months. At SMU, wherever possible we compare multiple measures of activity for each sector and though only regional the CFMMI does confirm other data for manufacturing and steel production activity. Year over year the 3MMA on the CFMMI is up by 2.8 percent and the steel component by 1.4 percent.