Chicago Fed: "Index points to a pickup in economic growth in October"

"Index points to a pickup in economic growth in October." This is the headline for this morning's release of the Chicago Fed's National Activity Index, and here is the opening paragraph from the report:

Led by improvements in production-related indicators, the Chicago Fed National Activity Index (CFNAI) rose to +0.76 in October from –0.18 in September. All four broad categories of indicators used to construct the index made positive contributions in October, and all four categories improved from September. The index’s three-month moving average, CFNAI-MA3, ticked down to +0.21 in October from +0.22 in September. [Download report]

Background on the CFNAI

The Chicago Fed's National Activity Index (CFNAI) is a monthly indicator designed to gauge overall economic activity and related inflationary pressure. It is a composite of 85 monthly indicators as explained in this background PDF file on the Chicago Fed's website. The index is constructed so a zero value for the index indicates that the national economy is expanding at its historical trend rate of growth. Negative values indicate below-average growth, and positive values indicate above-average growth.

The first chart below shows the recent behavior of the index since 2007. The red dots show the indicator itself, which is quite noisy, together with the 3-month moving average (CFNAI-MA3), which is more useful as an indicator of the actual trend for coincident economic activity.