The 2020 Mid-Year Economic Update_long

Chicago Fed National Activity Index Inches Down in October

The index's three month moving average declined for the first time in 2009, from -0.67 to -0.91 in October.

The Chicago Fed National Activity Index was -1.08 in October, down slightly from -1.01 in September. A decline in the contribution of production and income indicators offset small improvements in the other three broad categories of indicators that make up the index.

The index’s three-month moving average, CFNAI-MA3, decreased to -0.91 in October from -0.67 in September, declining for the first time in 2009. October’s CFNAI-MA3 suggests that growth in national economic activity remained below its historical trend. With regard to inflation, the amount of economic slack reflected in the CFNAI-MA3 indicates low inflationary pressure from economic activity over the coming year.

Production-related indicators – with a contribution of -0.07 in October compared with 0.23 in September – made a negative contribution to the index for the first time since June 2009. Much of the decline in this category’s contribution can be attributed to lower manufacturing production. In particular, durable goods manufacturing declined 0.4 percent in October after rising 1.1 percent in September. Partially offsetting this was an increase in the Institute for Supply Management’s Manufacturing Purchasing Managers’ Production Index. It increased to 63.3 in October from 55.7 in the previous month.

Employment-related indicators made a contribution of -0.46 to the index in October versus -0.60 in September. Payroll employment decreased by 190,000 in October after declining by 219,000 in September. Household employment also declined at a slower pace in October. However, the unemployment rate increased to 10.2 percent in October from 9.8 percent in September.

The consumption and housing category’s contribution to the index increased to -0.52 in October, following a contribution of -0.61 in September. Small gains in a number of consumption indicators accounted for much of the increase. In contrast, housing starts were lower in October at an annual rate of 529,000 units compared with 592,000 units in September. The sales, orders, and inventories category also improved in October, contributing -0.02, compared with -0.04 in September.

Thirty-two of the 85 individual indicators made positive contributions to the index in October, while 53 made negative contributions. Forty-three indicators improved from September to October, while 42 indicators deteriorated. Of the indicators that improved, 21 made negative contributions. The index was constructed using data available as of November 19, 2009. At that time, October data for 52 of the 85 indicators had been published. For all missing data, estimates were used in constructing the index.

The September monthly index was revised to -1.01 from an initial estimate of -0.81. 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 downward revision to the September monthly index was due primarily to differences between the estimates of previously unavailable data and subsequently published data.

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