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Led by improvements in production-related indicators, the Chicago Fed National Activity Index (CFNAI) increased to +0.14 in December from -0.33 in November. Three of the four broad categories of indicators that make up the index increased from November, and two of the four categories made positive contributions to the index in December.
The index’s three-month moving average, CFNAI-MA3, edged up to -0.07 in December from -0.14 in November. December’s CFNAI-MA3 suggests that growth in national economic activity was slightly 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, which is also a three-month moving average, was unchanged at -0.06 in December. Thirty-seven of the 85 individual indicators made positive contributions to the CFNAI in December, while 48 made negative contributions. Fifty indicators improved from November to December, while thirty-five indicators deteriorated. Of the indicators that improved, 23 made negative contributions.
The contribution from production-related indicators to the CFNAI jumped to +0.20 in December from -0.30 in November. Total industrial production increased 0.8 percent in December after decreasing 0.7 percent in November. In addition, the sales, orders, and inventories category made a contribution of +0.02 to the CFNAI in December, up from -0.01 in November.
The contribution of the personal consumption and housing category to the CFNAI increased to -0.06 in December from –0.10 in November. Housing starts increased to 1,226,000 annualized units in December from 1,102,000 in November, but housing permits ticked down to 1,210,000 annualized units in December from 1,212,000 in the previous month.
Employment-related indicators contributed -0.01 to the CFNAI in December, down from +0.08 in November. The civilian unemployment rate increased to 4.7 percent in December from 4.6 percent in November, and nonfarm payrolls increased by 156,000 in December after rising by 204,000 in the previous month.