Chicago Fed National Activity Index Little Changed From April

The Chicago Fed National Activity Index was -2.30 in May, little changed from -2.27 in April. All four broad categories of indicators made negative contributions to the index in May.

The three-month moving average, CFNAI-MA3, was -2.67 in May, up slightly from -2.73 in the previous month. May's CFNAI-MA3 suggests that growth in national economic activity was well below its historical trend. With regard to inflation, the amount of economic slack reflected in the CFNAI-MA3 indicates low inflationary pressure from economic activity over the coming year.

The small decrease in the index in May was primarily due to the production and income category of indicators. This category made a larger negative contribution to the index in May, -0.65, compared with its contribution in April, -0.47. Total industrial production declined 1.1% in May after decreasing 0.7% in April. In addition, manufacturing capacity utilization moved down to 65.0% in May from 65.6% in the previous month.

Employment-related indicators made the largest negative contribution to the index in May, at -0.99, down slightly from -0.94 in the previous month. Total nonfarm payroll employment decreased by 345,000 in May after declining 504,000 in April. However, the unemployment rate increased to 9.4% in May from 8.9% in the previous month.

The consumption and housing category contributed -0.56 to the index in May, following a contribution of -0.66 in April. Housing starts increased to 532,000 annualized units in May from 454,000 in the previous month. Real personal consumption expenditures on durable goods increased 0.9% in May after declining 1.4% in April.

The sales, orders, and inventories category made a contribution of -0.11 to the index in May after contributing -0.21 in April. The Institute for Supply Management's Manufacturing Purchasing Managers' New Orders Index increased to 51.1 in May from 47.2 in April, rising above 50 for the first time since November 2007.

Fifteen of the 85 individual indicators made positive contributions to the index in May, while 70 made negative contributions. Forty-five indicators improved from April to May, while 40 indicators deteriorated. Of the improved indicators, 33 made negative contributions. The index was constructed using data available as of June 26, 2009. At that time, May data for 62 of the 85 indicators had been published. For all missing data, estimates were used in constructing the index.

The April monthly index was revised to -2.27 from an initial estimate of -2.06. Revisions to the monthly index can be attributed to two main factors: revisions in previously published data and differences between the estimates of previously unavailable data and subsequently published data. The downward revision to the April monthly index was due nearly equally to each factor.