The 2020 Mid-Year Economic Update_long

Chicago Fed National Activity Index Decreases in March

The indexs three-month moving average declined to -0.27.

The Chicago Fed National Activity Index moved down to -0.42 in March from -0.18 in February. Two of the four broad categories of indicators that make up the index decreased from February, and three of the four categories made negative contributions to the index in March.

The index’s three-month moving average, CFNAI-MA3, decreased to -0.27 in March from -0.12 in February. March’s CFNAI-MA3 suggests that growth in national economic activity was some­what 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 -0.09 in March from -0.02 in February. Thirty-eight of the 85 individual indicators made positive contributions to the CFNAI in March, while 47 made negative contributions. Thirty-seven indicators improved from February to March, while 48 indicators deteriorated. Of the indica­tors that improved, 14 made negative contributions.

Production-related indicators made a contribution of -0.27 to the CFNAI in March, down from -0.08 in February. Industrial produc­tion declined 0.6 percent in March after moving up 0.1 percent in February. The contribution of the sales, orders, and inventories category to the CFNAI was unchanged at +0.01 in March.

Employment-related indicators contributed -0.03 to the CFNAI in March, down from +0.11 in February. Nonfarm payrolls increased by 126,000 in March, following a gain of 264,000 in the previous month. However, the unemployment rate was steady at 5.5 percent in March.

The contribution of the personal consumption and housing category to the CFNAI increased to -0.13 in March from -0.22 in February. Housing starts moved up to 926,000 annualized units in March from 908,000 in February. However, housing permits decreased to 1,039,000 annualized units in March from 1,102,000 in the previous month.

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