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Led by improvements in production-related indicators, the Chicago Fed National Activity Index (CFNAI) increased to in June from -0.48 in May. Two of the four broad categories of indicators that make up the index improved from May, but only the production and income category made a positive contribution in June.
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The index’s three-month moving average, CFNAI-MA3, increased from -0.38 in May to -0.20 in June, its fourth consecutive reading below zero. June’s CFNAI-MA3 suggests that growth in national economic activity was below its historical trend. The economic growth reflected in this level of the CFNAI-MA3 suggests subdued inflationary pressure from economic activity over the coming year.
The CFNAI Diffusion Index also moved up in June, rising to -0.08 from -0.22 in the previous month. Forty of the 85 individual indicators made positive contributions to the CFNAI in June, while 45 made negative contributions. Forty-two indicators improved from May to June, while 43 indicators deteriorated. Of the indicators that improved, 14 made negative contributions.
The contribution from production-related indicators to the CFNAI increased to +0.13 in June from -0.27 in May. Total industrial production rose 0.4 percent in June after edging down 0.2 percent in May, and manufacturing production increased 0.7 percent in June after decreasing 0.7 percent in the previous month. Likewise, manufacturing capacity utilization moved up to 77.7 percent from 77.3 percent over the same period.
The contribution from the consumption and housing category to the CFNAI also increased, edging up to -0.23 in June from -0.26 in May. Housing starts rose to 760,000 annualized units in June from 711,000 in May, but housing permits decreased to 755,000 annualized units from 784,000 over the same period.
Employment-related indicators made a neutral contribution to the CFNAI in June, down from +0.05 in May. Total payroll employment increased by 80,000 in June following a gain of 77,000 in May; however, civilian employment increased by 128,000 in June after recording a gain of 422,000 in the previous month.
The contribution from the sales, orders, and inventories category to the CFNAI in June was also lower, decreasing to -0.06 from a neutral contribution in May.