Led by improvements in housing-related indicators, the Chicago Fed National Activity Index increased to -0.46 in June from -0.55 in May; however, the index remained negative for the third consecutive month. Three of the four broad categories of indicators that make up the index improved in June, but only one made a positive contribution to the index.

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The indexs three-month moving average, CFNAI-MA3, decreased to -0.60 in June from -0.31 in May, reaching its lowest level since October 2009. Junes CFNAI-MA3 suggests that growth in national economic activity was below its historical trend. With regard to inflation, the economic slack reflected in Junes CFNAI-MA3 suggests subdued inflationary pressure from economic activity over the coming year.

The consumption and housing category contributed -0.31 to the index in June, up from -0.42 in May; the June contribution was the categorys highest since March 2010. Housing starts rose to 629,000 annualized units in June from 549,000 in May, and building permits increased to 624,000 annualized units in June from 609,000 in the previous month.

The contribution to the index from employment-related indicators decreased to -0.15 in June from -0.07 in May, marking its lowest level since June 2010. Total nonfarm payroll employment rose by only 18,000 in June after increasing by 25,000 in May. Similarly, the unemployment rate increased to 9.2 percent in June from 9.1 percent in May.

Production-related indicators made a contribution of -0.04 to the index in June, up slightly from -0.08 in May. Industrial production increased 0.2 percent in June after ticking down 0.1 percent in May, but manufacturing capacity utilization remained at 74.4 percent for the third straight month.

The sales, orders, and inventories category made the lone positive contribution to the index in June, +0.04, up from +0.02 in May. The Institute for Supply Managements Manufacturing Purchasing Managers Inventories Index increased to 54.1 in June from 48.7 in May.

Forty-one of the 85 individual indicators made positive contributions to the index in June, while 44 made negative contributions. Fifty-two indicators improved from May to June, while 31 indicators deteriorated and two were unchanged. Of the indicators that improved, 21 made negative contributions. The index was constructed using data available as of July 21, 2011. At that time, June data for 52 of the 85 indicators had been published. For all missing data, estimates were used in constructing the index.

The May monthly index was revised to -0.55 from an initial estimate of -0.37, and the April monthly index was revised to -0.78 from a previous estimate of -0.56. 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 revision to the May monthly index was due primarily to the former, while the revision to the April monthly index was due primarily to the latter.