The Midwest Economy Index declined to 0.29 in July from 0.43 in June, the Federal Reserve Bank of Chicago said Thursday.

The relative MEI reversed to negative 0.07 from positive 0.07 in June.

Manufacturing added 0.32 to the index, after contributing 0.38 to the index in June, while adding 0.27 to the relative MEI, after a 0.28 contribution in June.

Construction and mining subtracted 0.06 in the month, after a 0.03 subtraction in June, while taking 0.08 from relative MEI index after a 0.05 subtraction in June.

The service sector MEI subtracted 0.06 after a 0.09 subtraction the prior month, while subtracting 0.29 from relative MEI after a 0.26 subtraction in June.

Consumer spending added 0.09 to MEI, after a 0.17 addition in June, while contributing 0.03 to relative MEI after a 0.11 addition the prior month.

By state, Illinois made the largest contribution in July, adding 0.11 to the index, Michigan contributed 0.08, Wisconsin added 0.08, Iowa contributed 0.03, and Indiana was neutral.

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.

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Gary Siegel

Gary Siegel

Gary Siegel has been at The Bond Buyer since 1989, currently covering economic indicators and the Federal Reserve system.