The 2020 Mid-Year Economic Update_long

Chicago Fed National Activity Index Decreases in October

The index's three-month moving average, CFNAI-MA3, decreased from -0.36 in September to -0.56 in October.

Led by declines in production-related indicators, the Chicago Fed National Activity Index (CFNAI) decreased to -0.56 in October from 0 in September. All four broad categories of indicators that make up the index decreased from September, and only two made positive contributions to the index in October.

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The index’s three-month moving average, CFNAI-MA3, decreased from -0.36 in September to -0.56 in October, its eighth consecutive reading below zero. October’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 down in October, decreasing to -0.32 from -0.14 in September. Thirty-one of the 85 individual indicators made positive contributions to the CFNAI, while 54 made negative contributions. Thirty-three indicators improved from September to October, while 51 indicators deteriorated and one was unchanged. Of the indicators that improved, 13 made negative contributions.

Production-related indicators contributed -0.45 to the CFNAI in October, down from -0.06 in September. Hurricane Sandy negatively affected industrial production in October.

Manufacturing production decreased 0.9 percent in October after increasing 0.1 percent in September, and manufacturing capacity utilization declined to 75.9 percent from 76.7 percent in the previous month.

Employment-related indicators contributed 0.07 to the CFNAI in October, down from 0.13 in September. The unemployment rate ticked up to 7.9 percent in October from 7.8 percent in September; but nonfarm payrolls increased 171,000 in October, compared with 148,000 in September. The contribution from the sales, orders and inventories category to the CFNAI also decreased in October, moving down to 0.01 from 0.10 in September.

The contribution from the consumption and housing category to the CFNAI decreased to -0.19 in October from -0.17 in September. Housing starts increased from 863,000 annualized units in September to 894,000 in October, their highest level since July 2008. However, housing permits declined from 890,000 annualized units in September to 866,000 in October.

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