The Midwest Economy Index surged to positive 0.41 in August from a revised positive 0.22 in July, first reported as positive 0.25, the Federal Reserve Bank of Chicago reported Monday.
The relative MEI improved to positive 0.73 in August from an unrevised positive 0.45 in July. The positive relative MEI indicates that growth in the region was higher than expected.
Manufacturing contributed 0.06 to the index in August, after a 0.04 addition in July, while subtracting 0.06 from the relative MEI, after a 0.03 deduction in July.
Construction and mining took 0.09 from MEI in the month, after subtracting 0.17 in July, while subtracting 0.01 from relative MEI in August after taking 0.10 from the index in July.
The service sector added 0.39 to MEI in August after contributing 0.27 the prior month, while contributing 0.79 to relative MEI after adding 0.49 in July.
Consumer spending contributed 0.05 to MEI, after adding 0.08 in July, while adding 0.01 to relative MEI, after a 0.08 contribution in July.
By state, Iowa made the largest contribution in July, 0.23, with Wisconsin contributing 0.11, Michigan adding 0.04, and Indiana contributing 0.04. Illinois took away 0.01.
The index is a weighted average of 128 state and regional indicators encompassing the five states in the Seventh Federal Reserve District (Illinois, Indiana, Iowa, Michigan, and Wisconsin). The index measures growth in nonfarm business activity.
A zero value for the MEI indicates that the Midwest economy is expanding at its historical trend rate of growth; negative values are associated with below-trend growth while positive values indicate above-trend growth. A zero value for the relative MEI indicates that the Midwest economy is growing at a rate historically consistent with the growth of the national economy; positive values indicate above-average relative growth; and negative values indicate below-average relative growth.