The 2020 Mid-Year Economic Update_long

Chicago Fed National Activity Index Increases in November

The indexs three-month moving average reached its highest level since May 2010.

Led by improvements in production-related indicators, the Chicago Fed National Activity Index (CFNAI) rose to +0.73 in November from +0.31 in October. Two of the four broad categories of indicators that make up the index increased from October, and only one of the four categories made a negative contribution to the index in November.

The index’s three-month moving average, CFNAI-MA3, rose to +0.48 in November from +0.09 in October, reaching its highest level since May 2010. November’s CFNAI-MA3 suggests that growth in national economic activity was near its historical trend. The economic growth reflected in this level of the CFNAI-MA3 suggests limited inflationary pressure from economic activity over the coming year.

The CFNAI Diffusion Index, which is also a three-month moving average, increased to +0.37 in November from +0.18 in October. Fifty-four of the 85 individual indicators made positive contributions to the CFNAI in November, while 31 made negative contributions. Fifty indica­tors improved from October to November, while 35 indicators deteriorated. Of the indicators that improved, six made negative contributions.

Production-related indicators made a contribution of +0.64 to the CFNAI in November, up from +0.09 in October. Industrial production increased 1.3 percent in November after rising 0.1 percent in October, and manufacturing production increased 1.1 percent in November after moving up 0.4 percent in the previous month.

Employment-related indicators contributed +0.17 to the CFNAI in November, down somewhat from +0.22 in October. The unemployment rate remained steady at 5.8 percent in November, and average weekly initial unemployment insurance claims increased in November from October. However, nonfarm payrolls increased by 321,000 in November, up from a gain of 243,000 in the previous month.

The contribution of the sales, orders, and inventories category to the CFNAI decreased to +0.02 in November from +0.11 in October.

The contribution of the consumption and housing category to the CFNAI increased to -0.1 in November from -0.11 in October. Housing permits decreased to 1,035,000 annualized units in November from 1,092,000 in October and housing starts decreased to 1,028,000 annualized units in November from 1,045,000 in the previous month.

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