The 2020 Mid-Year Economic Update_long

Chicago Fed National Activity Index Decreases in December

The decrease was led by declines in production-related indicators.

Led by declines in production-related indicators, the Chicago Fed National Activity Index (CFNAI) decreased to 0.02 in December from 0.27 in November. Two of the four broad categories of indicators that make up the index decreased from November, and only two of the four categories made positive contributions to the index in December.

The index’s three-month moving average, CFNAI-MA3, edged up from –0.13 in November to –0.11 in December – its tenth consecutive reading below zero. December’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 also moved up in December, increasing to -0.05 from -0.12 in November. Forty-one of the 85 individual indicators made positive contributions to the CFNAI in December, while 44 made negative contributions. Thirty-six indicators improved from November to December, while 48 indicators deteriorated and one was unchanged. Of the indicators that improved, 17 made negative contributions.

Production-related indicators contributed 0.12 to the CFNAI in December, down from 0.49 in November. Industrial production increased 0.3 percent in December after rising 1 percent in November, and manufacturing production increased 0.8 percent in December after moving up 1.3 percent in the previous month.

Employment-related indicators contributed 0.09 to the CFNAI in December, up from -0.02 in November. Private nonfarm payrolls rose by 168,000 in December after increasing by 171,000 in November, and civilian employment rose by 28,000 in December after decreasing by 51,000 in November.

The contribution from the sales, orders, and inventories category to the CFNAI also increased in December, edging up to -0.01 from -0.06 in November.

The contribution from the consumption and housing category to the CFNAI decreased to -0.17 in December from -0.14 in November. Housing permits edged up to 903,000 annualized units in December from 900,000 in November. Housing starts also increased, rising to 954,000 annualized units in December from 851,000 in the previous month. 

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