The Chicago Fed National Activity Index (CFNAI) increased to –0.25 in January from –0.51 in December. All four broad categories of indicators that make up the index increased from December, but only one of the four categories made a positive contribution to the index in January. The index’s three-month moving average, CFNAI-MA3, moved up to –0.09 in January from –0.23 in December.
Production-related indicators contributed –0.23 to the CFNAI in January, up from –0.34 in December. Industrial production decreased 0.3% in January after decreasing 0.4% in December. The contribution of the sales, orders, and inventories category to the CFNAI moved up to –0.02 in January from –0.06 in December. The Institute for Supply Management’s Manufacturing New Orders Index increased to 52.0 in January from 47.6 in the previous month.
Employment-related indicators contributed –0.03 to the CFNAI in January, up from –0.12 in December. Nonfarm payrolls rose by 225,000 in January after increasing by 147,000 in December, but the unemployment rate ticked up to 3.6% in January from 3.5% in the previous month. The contribution of the personal consumption and housing category to the CFNAI edged up period of economic expansion, an increasing likelihood of a recession has historically been associated with a CFNAI-MA3 value below –0.70. Conversely, following a period of economic contraction, an increasing likelihood of an expansion has historically been associated with a CFNAI-MA3 value above –0.70 and a significant likelihood of an expansion has historically been associated with a CFNAI-MA3 value above +0.20.
