Led by declines in production-related indicators, the Chicago Fed National Activity Index fell to -0.51 in May from +0.05 in April. All four broad categories of indicators that make up the index decreased from April, and all four categories made negative contributions to the index in May.
The index’s three-month moving average, CFNAI-MA3, decreased to -0.36 in May from -0.25 in April. May’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, moved down to -0.30 in May from -0.23 in April. Twenty-eight of the 85 individual indicators made positive contributions to the CFNAI in May, while 57 made negative contributions. Twenty-eight indicators improved from April to May, while 56 indicators deteriorated and one was unchanged. Of the indicators that improved, 12 made negative contributions.
The contribution from production-related indicators to the CFNAI fell to -0.32 in May from +0.13 in April. Manufacturing industrial production declined by 0.4 percent in May after increasing by 0.2 percent in April, and manufacturing capacity utilization declined to 74.8 percent in May from 75.2 percent in the previous month. In contrast, the sales, orders, and inventories category made a contribution of -0.01 to the CFNAI in May, down only slightly from a neutral contribution in April.
The contribution from employment-related indicators to the CFNAI edged down to -0.09 in May from -0.06 in April. Nonfarm payrolls increased by only 38,000 in May after rising by 123,000 in the previous month. However, the civilian unemployment rate fell to 4.7 percent in May from 5.0 percent in April.
The contribution of the personal consumption and housing category to the CFNAI decreased to -0.09 in May from -0.02 in April. Housing starts moved down to 1,164,000 annualized units in May from 1,167,000 in April, but housing permits moved up to 1,138,000 annualized units in May from 1,130,000 in the previous month.
