The 2020 Mid-Year Economic Update_long

Chicago Fed National Activity Index Down in June

Two of four indicators made positive contributions to the index.

Led by slower growth in production-related indicators, the Chicago Fed National Activity Index edged down to 0.12 in June from 0.16 in May, which was revised from an initial estimate of 0.21. Two of the four broad categories of indicators that make up the index made nonpositive contributions to the index in June, but two of the four categories increased from May.

The index’s three-month moving average, CFNAI-MA3, decreased to 0.13 in June from 0.28 in May, marking its fourth consecutive reading above zero. June’s CFNAI-MA3 suggests that growth in national economic activity was somewhat above 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, decreased to 0.18 in June from 0.33 in May. Forty-four of the 85 individual indicators made positive contributions to the CFNAI in June, while 41 made negative contributions. Forty indicators improved from May to June, while 43 indicators deteriorated and two were unchanged. Of the indicators that improved, 12 made negative contributions.

Employment-related indicators contributed 0.22 to the CFNAI in June, up from 0.14 in May. The unemployment rate decreased to 6.1 percent in June from 6.3 percent in May; and nonfarm payrolls rose by 288,000 in June after increasing by 224,000 in the previous month.

Production-related indicators made a neutral contribution to the CFNAI in June, down from 0.14 in May. Industrial production rose 0.2 percent in June after rising 0.5 percent in May, and manufacturing production increased 0.1 percent in June after increasing 0.4 percent in the previous month. The contribution of the sales, orders, and inventories category to the CFNAI remained at 0.04 in June.

The contribution from the consumption and housing category to the CFNAI edged up to -0.14 in June from -0.16 in May. Consumption indicators, on balance, improved, pushing the category’s contribution higher. However, housing starts decreased to 893,000 annualized units in June from 985,000 in May, and housing permits decreased to 963,000 annualized units in June from 1,005,000 in the previous month.

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