U.S. Economy Picked Up Steam in February, Chicago Fed Index Says

Economic growth in the U.S. accelerated last month as both production and demand picked up, a monthly index published by the Federal Reserve Bank of Chicago said Monday.

The Chicago Fed National Activity Index rose to 0.05 in February, the first positive reading since November. The index had been at zero or below in five of the previous six months.

A zero value for the index has historically been associated with the national economy expanding at its average rate of growth. Negative scores indicate below-average growth. Positive scores, such as the one seen in February, indicate above average growth.

has been associated with the national economy expanding at its historical trend (average) rate of growth; negative values with below-average growth (in standard deviation units); and positive values with above-average growth.

The rise was unexpected. The consensus forecast was for a reading of negative 0.5 after the preliminary January reading of negative 0.3. None of the forecasters surveyed by Econoday had the index rising into positive territory. The January reading was revised down to 0.54.

The Chicago Fed said all four broad categories of indicators included in the index improved since January, with three making positive contributions. The production measures turned positive after being a drag on the index in January. Sales, orders, and inventories likewise flipped into positive territory. Employment made a small positive contribution after being negative in the prior month.

The gauge of personal consumption, which had been a drag in January, was neutral in February.

The acceleration of the economy in February could create further doubts about the timing of rate cuts expected this year from the Federal Reserve. With the pace of growth picking up, there seems to be little urgency for a rate cut. Futures markets on Monday implied that the Fed will not cut until June at the earliest.