Led by declines in production- and employment-related indicators, the Chicago Fed National Activity Index (CFNAI) fell to –4.19 in March from +0.06 in February. All four broad categories of indicators used to construct the index made negative contributions in March, and three of the four categories decreased from February. The index’s three-month moving average, CFNAI-MA3, decreased to –1.47 in March from –0.20 in February. Following a period of economic expansion, an increasing likelihood of a recession has historically been associated with a CFNAI-MA3 value below –0.70.

The CFNAI Diffusion Index, which is also a three-month moving average, moved down to –0.32 in March from –0.21 in February. Eighteen of the 85 individual indicators made positive contributions to the CFNAI in March, while 65 made negative contributions and two made neutral contributions. Twenty-two indicators improved from February to March, while 63 indicators deteriorated. Of the indicators that improved, nine made negative contributions.

Production-related indicators contributed –2.72 to the CFNAI in March, down from +0.06 in February. Industrial production decreased 5.4% in March after increasing 0.5% in February. The contribution of the sales, orders, and inventories category to the CFNAI ticked up to –0.05 in March from –0.06 in February.

Employment-related indicators contributed –1.23 to the CFNAI in March, down from +0.07 in February. Nonfarm payrolls fell by 701,000 in March after increasing by 275,000 in February, and the unemployment rate increased to 4.4% in March from 3.5% in the previous month. The contribution of the personal consumption and housing category to the CFNAI decreased to –0.19 in March from –0.02 in February. Housing starts decreased to 1,216,000 annualized units in March from 1,564,000 in the previous month.