The 2020 Mid-Year Economic Update_long

Chicago Fed National Activity Index Rises in December

The index's three-month moving average, CFNAI-MA3, decreased during the month.

The Chicago Fed National Activity Index moved up to -0.22 in December from -0.36 in November. Two of the four broad categories of indicators that make up the index increased from November, but three of the four categories made negative contributions to the index in December.

The index’s three-month moving average, CFNAI-MA3, decreased to -0.24 in December from -0.19 in November. December’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, ticked up to -0.12 in December from -0.13 in November. Thirty-five of the 85 individual indicators made positive contributions to the CFNAI in December, while 50 made negative contributions. Fifty-one indicators improved from November to December, while 32 indicators deteriorated and two were unchanged. Of the indicators that improved, 26 made negative contributions.

The contribution from production-related indicators to the CFNAI increased to -0.26 in December from -0.40 in November. Industrial production decreased by 0.4 percent in December after declining by 0.9 percent in November. Moreover, manufacturing production decreased by 0.1 percent in December after decreasing by the same percentage in the previous month. The sales, orders, and inventories category made a contribution of –0.02 to the CFNAI in December, up slightly from -0.03 in November.

The contribution from employment-related indicators to the CFNAI was unchanged at +0.12 in December. Nonfarm payrolls rose by 292,000 in December after increasing by 252,000 in November, and the unemployment rate remained at 5.0 percent in December.

The contribution of the personal consumption and housing category to the CFNAI edged down to -0.07 in December from -0.05 in November. Housing starts decreased to 1,149,000 annualized units in December from 1,179,000 in November. In addition, housing permits moved down to 1,232,000 annualized units in December from 1,282,000 in the previous month.

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