The 2020 Mid-Year Economic Update_long

Chicago Fed National Activity Index Decreases in February

The indexs three-month moving average declined to 0.08.

The Chicago Fed National Activity Index edged lower to -0.11 in February from -0.10 in January. Two of the four broad categories of indicators that make up the index decreased from January, and two of the four categories made negative contributions to the index in February.

The index’s three-month moving average, CFNAI-MA3, declined to -0.08 in February from +0.26 in January. February’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, decreased to a neutral reading in February from +0.10 in January. Forty-eight of the 85 individual indicators made positive contributions to the CFNAI in February, while 37 made negative contributions. Forty-six indicators improved from January to February, while 39 indicators deteriorated. Of the indicators that improved, ten made negative contributions.

Production-related indicators made a contribution of -0.07 to the CFNAI in February, up from -0.20 in January. Industrial production increased 0.1 percent in February after declining 0.3 percent in the previous month, and manufacturing production decreased 0.2 percent in February after declining 0.3 percent in January. The contribution of the sales, orders, and inventories category to the CFNAI ticked up to +0.02 in February from +0.01 in January.

Employment-related indicators contributed +0.11 to the CFNAI in February, down slightly from +0.16 in January. The unemployment rate decreased to 5.5 percent in February. However, civilian employment increased by 96,000 in February, following a gain of 759,000 in January; and average weekly initial unemployment insurance claims increased more in February than in the previous month.

The contribution of the personal consumption and housing category to the CFNAI decreased to -0.17 in February from –0.07 in January. Housing starts declined to 897,000 annualized units in February from 1,081,000 in the previous month. However, housing permits edged up to 1,092,000 annualized units in February from 1,060,000 in January.

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