The 2020 Mid-Year Economic Update_long

Chicago Fed National Activity Index Improves In June

The Chicago Fed National Activity Index was -1.80 in June, up from -2.30 in May. All four broad categories of indicators continued to make negative contributions to the index, with employment and housing-related indicators accounting for much of the weakness in June.

The three-month moving average, CFNAI-MA3, was -2.12 in June, up from -2.65 in the previous month. June's CFNAI-MA3 suggests that growth in national economic activity was well below its historical trend. With regard to inflation, the amount of economic slack reflected in the CFNAI-MA3 indicates low inflationary pressure from economic activity over the coming year.

The increase in the index was primarily due to the production and income category of indicators. This category made a smaller negative contribution to the ...

The Chicago Fed National Activity Index was -1.80 in June, up from -2.30 in May. All four broad categories of indicators continued to make negative contributions to the index, with employment and housing-related indicators accounting for much of the weakness in June.

The three-month moving average, CFNAI-MA3, was -2.12 in June, up from -2.65 in the previous month. June’s CFNAI-MA3 suggests that growth in national economic activity was well below its historical trend. With regard to inflation, the amount of economic slack reflected in the CFNAI-MA3 indicates low inflationary pressure from economic activity over the coming year.

The increase in the index was primarily due to the production and income category of indicators. This category made a smaller negative contribution to the index in June, -0.32, compared with its contribution in May, -0.70. The smaller negative contribution was driven by the fact that total industrial production decreased 0.4% in June after declining 1.2% in May.

Employment-related indicators also improved in June with a contribution of -0.82, up from -0.96 in May. Total nonfarm payroll employment declined 467,000 in June after decreasing 322,000 in the previous month. However, the increase in unemployment slowed in June as the unemployment rate inched up 0.1% after increasing 0.5% in May. In addition, manufacturing employment decreased 136,000 in June after declining 156,000 in the previous month.

The consumption and housing category’s contribution to the index improved slightly to -0.51 in June, following a contribution of -0.53 in May. Housing starts increased to 582,000 annualized units in June from 562,000 in the previous month; and building permits rose to 563,000 annualized units in June from 518,000 in May. The sales, orders, and inventories category also made a negative contribution of -0.14 in June after contributing -0.11 in May.

Fifteen of the 85 individual indicators made positive contributions to the index in June, while 70 made negative contributions. Fifty-two indicators improved from May to June, while 33 indicators deteriorated. Of the improved indicators, 44 made negative contributions. The index was constructed using data available as of July 17, 2009. At that time, June data for 49 of the 85 indicators had been published. For all missing data, estimates were used in constructing the index. The May monthly index was unrevised from an initial estimate of -2.30.

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