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Economy in Brief

Chicago Fed National Activity Index Improves
by Tom Moeller  November 23, 2015

The Chicago Federal Reserve reported that its National Activity Index (CFNAI) during October improved to -0.04 from revised readings of -0.29 during the prior two months. The figure indicates that economic growth returned to its trend rate following two months below it. The 3-month moving average backpedaled, however, to -0.20, its weakest reading since March. During the last ten years, there has been a 77% correlation between the Chicago Fed Index and the q/q change in real GDP.

The Employment, Unemployment and Hours component showed the greatest m/m improvement, rising to 0.11 from -0.06. It was the highest reading in three months. The Production & Income component also gained significantly to -0.05 from -0.17. The Sales, Orders & Inventories series remained roughly neutral at -0.01. The Personal Consumption & Housing series eased to -0.09 from -0.07. The latest was the weakest figure since March. The Fed reported that 41 of the 85 component series made positive contributions to the total while 44 made negative contributions.

The CFNAI is a weighted average of 85 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 Chicago Federal Reserve figures are available in Haver's SURVEYS database.

Chicago Federal Reserve Bank Oct Sep Aug Oct'14 2014 2013 201
National Activity Index (percent) -0.04 -0.29 -0.29 0.30 0.21 0.01 -0.05
 3-Month Moving Average -0.20 -0.03 0.05 0.05 -- -- --
  Personal Consumption & Housing -0.09 -0.07 -0.08 -0.08 -0.11 -0.14 -0.20
  Employment, Unemployment & Hours 0.11 -0.06 -0.07 0.22 0.18 0.10 0.09
  Production & Income -0.05 -0.17 -0.10 0.08 0.11 0.03 0.06
  Sales, Orders & Inventories -0.01 0.01 -0.05 0.07 0.04 0.03 -0.00
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