Led by improvements in production-related indicators, the Chicago Fed National Activity Index (CFNAI) increased to 0.10 in November from -0.64 in October. Two of the four broad categories of indicators that make up the index increased from October, but only the production and income category made a positive contribution to the index in November.
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The index’s three-month moving average, CFNAI-MA3, increased from -0.59 in October to -0.20 in November – its ninth consecutive reading below zero. November’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 November, increasing to -0.15 from -0.31 in October. Thirty-nine of the 85 individual indicators made positive contributions to the CFNAI in November, while 46 made negative contributions. Forty-four indicators improved from October to November, while 41 indicators deteriorated. Of the indicators that improved, 13 made negative contributions.
Production-related indicators contributed 0.41 to the CFNAI in November, up from -0.54 in October. This increase largely reflects the recovery of industrial production from the effects of Superstorm Sandy.
Total industrial production increased 1.1 percent in November after decreasing 0.7 percent in October, and manufacturing capacity utilization rose to 76.6 percent in November from 75.9 percent in the previous month.
Employment-related indicators contributed -0.06 to the CFNAI in November, down from 0.10 in October. Private nonfarm payrolls increased by 147,000 in November after rising by 187,000 in October, while the unemployment rate ticked down to 7.7 percent in November from 7.9 percent in the previous month.
The contribution from the sales, orders and inventories category to the CFNAI also decreased in November, moving down to -0.06 from 0.04 in October.
The contribution from the consumption and housing category to the CFNAI increased to -0.19 in November from -0.25 in October. Housing permits increased to their highest level in over four years, at 899,000 annualized units in November, up from 868,000 in October. However, housing starts decreased to 861,000 annualized units in November from 888,000 in the previous month.
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