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Economy in Brief

Chicago Fed National Activity Index Improves in May
by Tom Moeller  June 21, 2021

• Overall activity reading suggests moderate economic growth.

• Three of four components are positive.

The Federal Reserve Bank of Chicago's National Activity Index increased to 0.29 during May from -0.09 in April, revised from 0.24.

The three-month moving average, which smoothes out the m/m volatility in the index, rose to 0.81 last month after falling to 0.17 in April. During the last 10 years, there has been a 72% correlation between the Chicago Fed Index and quarterly growth in real GDP.

Improvement in the Production & Income component to 0.29 from -0.05 led May's gain. The Employment, Unemployment & Hours component rose to 0.16 last month after falling to 0.06 in April. The Sales, Orders & Inventories reading improved to 0.02 from -0.06. Offsetting these gains, the Personal Consumption & Housing series weakened to -0.18 in May, negative for the second straight month. The CFNAI diffusion index, which measures the breadth of movement in the component series, rose to 0.39 from 0.16, as 55 of the 85 component series contributed positively and 30 made negative contributions to the index overall.

The CFNAI is a weighted average of 85 monthly indicators of national economic activity. It is constructed to have an average value of zero and a standard deviation of one. Since economic activity tends toward trend growth rate over time, a positive index reading corresponds to growth above trend and a negative index reading corresponds to growth below trend. The CFNAI was constructed using data available as of June 17, 2021. At that time, May data for 51 of the 85 indicators had been published. For all missing data, estimates were used in constructing the index.

These figures are available in Haver's SURVEYS database.

Federal Reserve Bank of Chicago May Apr Mar May'20 2020 2019 2018
Chicago Fed National Activity Index (+ = Growth Above Trend) 0.29 -0.09 2.22 4.62 -0.48 -0.18 0.07
   Production & Income 0.29 -0.05 0.98 1.08 -0.13 -0.13 0.03
   Employment, Unemployment & Hours 0.16 0.06 0.37 1.82 -0.31 0.00 0.08
   Personal Consumption & Housing -0.18 -0.04 0.56 0.95 -0.04 -0.02 -0.04
   Sales, Orders & Inventories 0.02 -0.06 0.31 0.79 -0.00 -0.03 0.01
CFNAI 3-Month Moving Average 0.81 0.17 0.59 -5.79 -- -- --
CFNAI Diffusion Index 0.39 0.16 0.37 -0.40 0.20 -0.17 0.07
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