Underpinned by employment, January was another solid month for the economy judging by the national activity index which held in moderately positive ground at 0.12 vs a downward revised 0.14 for December. The 3-month average, reflecting the rolling off the hurricane-rebound month of October, fell sharply but is still positive at 0.17.
The employment component, reflecting the strength of January's payroll growth of 200,000, was the strongest contributor to the latest month's index, at 0.09, followed by sales, orders & inventories at 0.07. Consumption & housing, reflecting weakness in the former that offset strength in the latter, was a marginal negative for the fourth month in a row while production, the result of another disappointing performance for manufacturing, was a marginal drag on the month.
This report helps highlight two of the most important features of the early 2018 economy: strength in employment and softness in consumer spending.