Retail sales and employment report fed a strong gain in January's national activity index, jumping nearly 3/4 of a point to 0.23 for the first positive score since last September and the best score since last July. Yet steeply poor readings in December and November leave the 3-month average still well into the negative column at minus 0.26.

Personal consumption & housing along with employment together contributed 0.25 points to the headline, split nearly even between the two. Retail sales surged more than 5 percent in January, explaining strength for the former component, while nonfarm payrolls surged more than 500,000 to explain the ladder. Whether either of these components can extend their level of strength into February is understandably in doubt, yet they were a plus for January. The report's two other components were nearly neutral, adding 0.4 points from production indicators and subtracting 0.06 points from sales, orders and inventories.

The Chicago Fed National Activity Index (CFNAI) is a monthly index that tracks overall economic activity and inflationary pressures. The CFNAI is a weighted average of 85 existing monthly indicators of national economic activity. It is constructed to have an average value of zero and a standard deviation of one. Since economic activity tends toward trend growth over time, a positive index reading corresponds to growth above trend and a negative index reading corresponds to growth below trend.

This index is unique among regional Federal Reserve Bank indexes in that it is national in scope. Investors are eager to have insight into economic growth and inflation. This index combines 85 diverse and already released indicators from four broad categories -- production and income; employment, unemployment, and hours; personal consumption and housing; and sales, orders, and inventories -- into an overall index to measure economic performance. The index provides another measure with which investors can measure overall growth.