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Economy in Brief
German PPI Accelerates
The German year-on-year PPI has generally been decelerating since early 2017...
U.S. Leading Economic Indicators Signal Continued Expansion
The Conference Board's Composite Index of Leading Economic Indicators increased 0.3% during March...
Philadelphia Fed Factory Conditions Improve; Prices Jump
The Philadelphia Fed reported that its General Factory Sector Business Conditions Index rose to 23.2 during April...
U.S. Initial Claims for Unemployment Insurance Are Little Changed
Initial unemployment insurance claims slipped to 232,000 (-6.1% y/y) during the week ended April 14...
U.K. Retail Sales Fall
U.K. GDP is expected to cool its jets when the first quarter GDP number is released...
by Tom Moeller July 26, 2010
Economic activity began this summer on a sour note. The June National
Activity Index (CFNAI), reported by the Chicago Fed, fell to -0.63 which was the
lowest level since last October. Moreover, prior months' improvement was hardly
indicative of a gangbuster economic recovery, but this latest reading supports
the message from other economic series that the current recovery has hit a soft
patch. Nevertheless, the index remained up from it low of -4.12 reached in
January '09. During the last ten years the has been a 76% correlation between
the index level and the q/q change in real GDP.
The three-month moving average of the index, which smoothes out some of the series' volatility, also fell to its lowest level since February.
An index level at or below -0.70 typically has indicated negative U.S. economic growth. A zero value of the CFNAI indicates that the economy is expanding at its historical trend rate of growth of roughly 3.0%. The complete CFNAI report is available here.
The Chicago Fed indicated that the loss of forward momentum was broad based amongst the component series, but most notable in the job market indicators and the production & income readings which went negative after months of positive values. Thirty-six of the 85 individual indicators made positive contributions to the index in June, while 49 made negative contributions.Twenty-nine indicators improved from May to June, while 56 indicators deteriorated.
The CFNAI is a weighted average of 85 indicators of economic activity. The indicators reflect activity in the following categories: production & income, the labor market, personal consumption & housing, manufacturing & trade sales, and inventories & orders.
In a separate survey, the Chicago Fed indicated that its Midwest manufacturing index improved during May to its highest level since December 2008. Indicators for the steel, machinery and resource sectors each rose. The Chicago Federal Reserve figures are available in Haver's SURVEYS database.
Chicago Fed | June | May | April | June '09 | 2009 | 2008 | 2007 |
---|---|---|---|---|---|---|---|
CFNAI | -0.63 | 0.31 | 0.16 | -1.72 | -1.57 | -1.83 | -0.34 |
3-Month Moving Average | -0.05 | 0.31 | 0.04 | -2.11 | -- | -- | -- |
Personal Consumption & Housing | -0.43 | -0.45 | -0.38 | -0.43 | -0.45 | -0.30 | -0.08 |
Employment, Unemployment & Hours | -0.13 | 0.08 | 0.23 | -0.80 | -0.77 | -0.68 | -0.16 |
Production & Income | -0.11 | 0.61 | 0.22 | -0.25 | -0.21 | -0.60 | -0.05 |
Sales, Orders & Inventories | 0.05 | 0.06 | 0.08 | -0.22 | -0.13 | -0.25 | -0.06 |