Led by improvements in production and employment related indicators, the Chicago Fed National Activity Index increased to -0.07 in March, up from -0.44 in February. Three of the four broad categories of indicators that make up the index made positive contributions in March, while the consumption and housing category made the lone negative contribution.

The index’s three-month moving average, CFNAI-MA3, increased to -0.18 in March from -0.31 in February. March’s CFNAI-MA3 suggests that growth in national economic activity, while still below average, continues to improve. With regard to inflation, the amount of economic slack reflected in the CFNAI-MA3 indicates subdued inflationary pressure from economic activity over the coming year.

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Production-related indicators made a contribution of +0.18 to the index in March, compared with +0.04 in February. Manufacturing industrial production increased 0.9 percent in March after increasing 0.2 percent in February, and manufacturing capacity utilization rose to 70.0 percent in March from 69.4 percent in the previous month. The manufacturing capacity utilization rate in March reached its highest level since November 2008.

Employment-related indicators made a contribution of +0.12 to the index in March, up from -0.13 in February. Total nonfarm payroll employment increased by 162,000 in March after declining by 14,000 in February. Manufacturing employment also increased in March, growing by 17,000; and average weekly hours worked in manufacturing rose to 41.0 in March from 40.5 in the previous month.

The sales, orders, and inventories category also made a positive contribution to the index in March, contributing +0.06 for the second consecutive month. In contrast, the consumption and housing category???s contribution to the index remained negative; this category contributed -0.42 in March, down slightly from -0.41 in February. Housing starts and building permits improved modestly in March, but both remained well below their historical averages.

Forty-six of the 85 individual indicators made positive contributions to the index in March, while 39 made negative contributions. Fifty indicators improved from February to March, while 34 indicators deteriorated and one was unchanged. Of the indicators that improved, 13 made negative contributions.

The February monthly index was revised to -0.44 from an initial estimate of -0.64.