The 2020 Mid-Year Economic Update_long

Chicago Fed National Activity Index Increased in June

The index's three-month moving average, CFNAI-MA3, also increased but marked its fourth consecutive month below zero.

The Chicago Fed National Activity Index (CFNAI) increased to -0.13 in June from -0.29 in May, led by improvements in production-related indicators. Two of the four broad categories of indicators that make up the index increased from May, and two of the four categories made positive contributions to the index in June.

The index’s three-month moving average, CFNAI-MA3, increased to -0.26 in June from -0.37 in May, marking its fourth consecutive reading below zero. June's CFNAI-MA3 suggests that growth in national economic activity was 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 increased to -0.03 in June from -0.19 in May. Forty-one of the 85 individual indicators made positive contributions to the CFNAI in June, while 44 made negative contributions. Forty-two indicators improved from May to June, while 41 indicators deteriorated and two were unchanged. Of the indicators that improved, 13 made negative contributions.

Production-related indicators contributed 0.04 to the CFNAI in June, up from -0.12 in May. Industrial production increased 0.3 percent in June after no change in May. Manufacturing production increased 0.3 percent in June after rising 0.2 percent in the previous month, and manufacturing capacity utilization edged up to 76.1 percent in June.

Employment-related indicators contributed 0.06 to the CFNAI in June, up from a neutral reading in May. The unemployment rate remained at 7.6 percent in June, and nonfarm payrolls increased by 195,000 for the second straight month.

The contribution from the consumption and housing category to the CFNAI decreased to -0.19 in June from -0.15 in May. Housing permits decreased to 911,000 annualized units in June from 985,000 in May, and housing starts decreased to 836,000 annualized units in June from 928,000 in the previous month. The contribution from the sales, orders, and inventories category to the CFNAI in June was also negative, edging down to -0.04 from -0.02 in May.

The May monthly index was revised to -0.29 from an initial estimate of-–0.30, and the April monthly index was revised to -0.37 from last month’s estimate of -0.52.

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