The 2020 Mid-Year Economic Update_long

Chicago Fed National Activity Index Decreases in November

Declines in the CFNAI led by a drop in employment-related indicators.

Led by declines in employment-related indicators, the Chicago Fed National Activity Index decreased to -0.46 in November from -0.25 in October. Three of the four broad categories of indicators that make up the index deteriorated from October to November, with only the production and income category improving.

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The index’s three-month moving average, CFNAI-MA3, ticked up to
-0.41 in November from -0.42 in October. November’s CFNAI-MA3 suggests that growth in national economic activity was below its historical trend. With regard to inflation, the amount of economic slack reflected in the CFNAI-MA3 suggests subdued inflationary pressure from economic activity over the coming year.

Employment-related indicators made a contribution of -0.16 to the index in November, down from +0.10 in October. Total nonfarm payroll employment edged up by 39,000 in November, after increasing by 172,000 in October; and the unemployment rate increased to 9.8 percent in November from 9.6 percent in the previous month.

The consumption and housing category contributed -0.42 to the index in November, ticking down from -0.40 in October. Housing starts increased to 555,000 annualized units in November from 534,000 in October, but building permits declined to 530,000 annualized units in November from 552,000 in the previous month.

Production-related indicators made a contribution of +0.08 to the index in November, up from -0.02 in October. Total industrial production rose 0.4 percent in November after edging down 0.2 percent in October, and manufacturing capacity utilization increased to 72.8 percent in November from 72.6 percent in the previous month. The sales, orders, and inventories category contributed +0.04 to the index in November, down slightly from +0.07 in October.

Thirty-five of the 85 individual indicators made positive contributions to the index in November, while 50 made negative contributions. Thirty-one indicators improved from October to November, while 54 indicators deteriorated. Of the indicators that improved, 14 made negative contributions. The index was constructed using data available as of December 16, 2010. At that time, November data for 49 of the 85 indicators had been published. For all missing data, estimates were used in constructing the index.

The October monthly index was revised to -0.25 from an initial estimate of -0.28. Revisions to the monthly index can be attributed to two main factors: revisions in previously published data and differences between the estimates of previously unavailable data and subsequently published data. The slight upward revision to the October monthly index was due primarily to differences between the estimates of previously unavailable data and subsequently published data.

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