Led by gains in production indicators, the Chicago Fed National Activity Index increased to 0.26 in March from 0.16 in February. March marked the fourth consecutive positive reading of the index and the sixth consecutive positive contribution from employment-related indicators. Neither has exhibited such patterns since April 2006.

We Deliver Distribution News to Your Inbox Sign up below to receive MDM Update, your free weekly distribution news update by email.

The indexs three-month moving average, CFNAI-MA3, edged down to 0.20 in March from 0.27 in February, but remained positive for the third consecutive month for the first time since May 2010. Marchs CFNAI-MA3 suggests that growth in national economic activity was somewhat above its historical trend. With regard to inflation, the CFNAI-MA3 suggests limited inflationary pressure from economic activity over the coming year.

Production-related indicators made a contribution of 0.39 to the index in March, up from 0.11 in February. Total industrial production rose 0.8 percent in March after increasing 0.1 percent in February. In addition, manufacturing capacity utilization increased to 75.3 percent in March from 74.9 percent in February. Also in March, the Institute for Supply Managements Manufacturing Purchasing Managers Production Index reached its highest level since January 2004.

Employment-related indicators made a contribution of 0.18 to the index in March, down from 0.42 in February. Private payrolls increased by 230,000 in March after rising by 240,000 in the previous month. The sales, orders, and inventories category also made a positive contribution to the index in March. Its contribution was 0.08, up slightly from 0.05 in February.

In contrast, the consumption and housing category contributed -0.39 to the index in March – a slight improvement from -0.42 in February. Housing starts increased to 549,000 annualized units in March from 512,000 in February, and building permits rose to 594,000 annualized units in March from 534,000 in the previous month.

Fifty-seven of the 85 individual indicators made positive contributions to the index in March, while 28 made negative contributions. Forty-nine indicators improved from February to March, while 35 indicators deteriorated and one was unchanged. Of the indicators that improved, 16 made negative contributions.

The index was constructed using data available as of April 21, 2011. At that time, March data for 52 of the 85 indicators had been published. For all missing data, estimates were used in constructing the index.

The February monthly index was revised to 0.16 from an initial estimate of -0.04.