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Led by improvements in production- and employment-related indicators, the Chicago Fed National Activity Index increased to -0.28 in October from -0.52 in September. Three of the four broad categories of indicators that make up the index made small positive contributions in October, while the consumption and housing category continued to make a large negative contribution.
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The index’s three-month moving average, CFNAI-MA3, decreased to -0.46 in October from -0.33 in September, reaching its lowest level since November 2009. October’s CFNAI-MA3 suggests that growth in national economic activity was below its historical trend for the fifth consecutive month. With regard to inflation, the amount of economic slack reflected in the CFNAI-MA3 suggests subdued inflationary pressure from economic activity over the coming year.
Production-related indicators made a contribution of +0.08 to the index in October, up from -0.12 in September. Manufacturing industrial production increased 0.5 percent in October, up from a 0.1 percent gain in the previous month; and manufacturing capacity utilization increased to 72.7 percent in October from 72.3 percent in September.
Employment-related indicators made a contribution of +0.03 to the index in October, up from -0.06 in September. Total nonfarm payroll employment increased by 151,000 in October, and private nonfarm payrolls rose by 159,000. In addition, the Institute for Supply Management’s Manufacturing Employment Index moved up to 57.7 in October from 56.5 in September.
The sales, orders, and inventories category contributed +0.05 to the index in October, down from +0.08 in September. The Institute for Supply Management’s Manufacturing New Orders Index increased sharply in October, rising to 58.9 from 51.1 in September.
The consumption and housing category contributed -0.43 to the index in October, down marginally from -0.41 in September. Housing starts declined to 519,000 annualized units in October from 588,000 in September, while building permits edged up to 550,000 annualized units in October from 547,000 in the previous month.
Forty-one of the 85 individual indicators made positive contributions to the index in October, while 44 made negative contributions. Forty-five indicators improved from September to October, while 39 indicators deteriorated and one was unchanged. Of the indicators that improved, 20 made negative contributions. The index was constructed using data available as of November 18, 2010. At that time, October data for 52 of the 85 indicators had been published.
For all missing data, estimates were used in constructing the index. The September monthly index was revised to -0.52 from an initial estimate of -0.58. 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.