CHICAGO (Dow Jones)--The U.S. economy may have slipped out of recession in September, according to data published Monday by the Chicago Federal Reserve, though its closely-watched National Activity Index actually lost ground in September.
The three-month rolling average of the index rose to -0.63 from -0.96 in August, an eighth successive gain that took it past a statistical milestone watched by economists. The index is a compendium of existing and estimated economic data, and the Chicago Fed said that the first month it has moved above -0.70 has "coincided closely with the end of each recession as eventually determined by the National Bureau of Economic Research" in each of the past four downturns.
Research by Chicago Fed economist Scott Brave published last month suggested that the index had performed fairly well in determining the timing of the beginning of recession and recovery.
The bank said the index actually dipped to -0.81 in September from -0.65 in August, weighed by production, consumption and housing data. Employment, sales, orders and inventory data all improved over the previous month.
The index was calculated with data available at Oct. 22, though estimates were used for 33 of the 85 indicators. The bank's activity index is widely used as an indicator of both economic activity and inflationary pressures.
While broaching the -0.70 threshold on a rolling basis, the consumption and housing indicators considered crucial in sustaining a domestic recovery actually lost ground in September. Their contribution deteriorated to -0.52 from -0.38 in August. The sales, orders and inventories category edged closer to positive territory last month - up to 0.03 from -0.14.
While the first half of the third-quarter earnings season has received a broadly enthusiastic reception from market watchers, many companies have been cautious about the sustainability of order patterns, suggesting much of the recent uptick was restocking rather than sustainable demand.
The Chicago Fed said 32 of the 85 indicators in the NAI made positive contributions in September. The August monthly index was revised upward to -0.65 from an initial -0.90, reflecting a difference between estimates and actual data in the prior survey.
-By Doug Cameron, Dow Jones Newswires; 312-750-4135; doug.cameron@dowjones.com
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