The 2020 Mid-Year Economic Update_long

Chicago Fed National Activity Index Slips in February

Continued weakness in the consumption and housing category offset gains in the other three broad categories.

The Chicago Fed National Activity Index ticked down to -0.04 in February from -0.01 in January. Three of the four broad categories of indicators that make up the index made positive contributions in February, but for the second consecutive month they were offset by continued weakness in the consumption and housing category.

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The indexs three-month moving average, CFNAI-MA3, increased to +0.11 in February from +0.05 in January, coming in positive for two consecutive months for the first time since April and May of 2010. Februarys CFNAI-MA3 suggests that growth in national economic activity was slightly above its historical trend. With regard to inflation, the CFNAI-MA3 indicates limited inflationary pressure from economic activity over the coming year.

Employment-related indicators made a contribution of +0.30 to the index in February, up from +0.06 in January. Total nonfarm payroll employment rose by 192,000 in February after increasing by 63,000 in January. Also in February, the unemployment rate edged lower to 8.9 percent, and average weekly initial unemployment insurance claims declined below 400,000 for the first time since June 2008.

Production-related indicators made a contribution of +0.03 to the index in February, down from +0.29 in January. Total industrial production decreased 0.1 percent in February after increasing 0.3 percent in January. In contrast, the Institute for Supply Managements Manufacturing Purchasing Managers Index increased to 61.4 in February from 60.8 in January. The sales, orders, and inventories category contributed +0.08 to the index in February, up slightly from +0.06 in January.

The consumption and housing category contributed 0.45 to the index in February, down from -0.39 in January. Housing starts declined to 479,000 annualized units in February from 618,000 in January, and building permits decreased to 517,000 annualized units in February from 563,000 in the previous month.

Fifty-three of the 85 individual indicators made positive contributions to the index in February, while 32 made negative contributions. Forty-five indicators improved from January to February, while 40 indicators deteriorated. Of the indicators that improved, nine made negative contributions. The index was constructed using data available as of March 17, 2011. At that time, February data for 52 of the 85 indicators had been published. For all missing data, estimates were used in constructing the index.

The January monthly index was revised to -0.01 from an initial estimate of -0.16.

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