The Midwest Economy Index surged to positive 0.25 in July from a revised negative 0.11 in June, first reported as negative 0.13, the Federal Reserve Bank of Chicago reported Thursday.
The relative MEI improved to positive 0.45 in July from a downwardly revised negative 0.16 in June, first reported as negative 0.07. The positive relative MEI indicates that growth in the region was somewhat higher than expected.
Manufacturing contributed 0.06 to the index in July, after a 0.07 addition in June, while subtracting 0.01 from the relative MEI, after a neutral contribution in June.
Construction and mining took 0.16 from MEI in the month, after subtracting 0.21 in June, while subtracting 0.10 from relative MEI in July after taking 0.18 from the index in June.
The service sector added 0.26 to MEI in July after taking 0.05 the prior month, while contributing 0.48 to relative MEI after subtracting 0.10 in June.
Consumer spending contributed 0.08 to MEI, after adding 0.08 in June, while adding 0.09 to relative MEI, after a 0.12 contribution in June.
By state, Iowa made the largest contribution in July, 0.23, with Indiana contributing 0.05, Michigan adding 0.04, Illinois took away 0.02, and Wisconsin subtracted 0.03.
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.