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Economy in Brief
Composite PMIs Step Back But Most Still Show Expansion
The S&P global composite PMIs took a turn for the worse in June...
U.S. ISM Manufacturing Index Falls Back in June to the Lowest Level in Two Years
The ISM U.S. manufacturing PMI fell to 53.0 in June...
U.S. Construction Spending Unexpectedly Dips in May After Seven Straight Monthly Rises
The value of construction put-in-place ticked down 0.1% m/m (+9.7% y/y) in May...
Developed Economies Manufacturing Sectors Hit Hard in June
Among the 18 countries in the table that report manufacturing PMI data in June, only four show m/m improvements...
U.S. Income Gained, Spending Slowed in May
Personal income growth remained solid while household spending slowed in May...
Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
by Tom Moeller July 21, 2020
• Data suggest recession is ending.
• Production & income rise while employment holds fairly steady.
The Federal Reserve Bank of Chicago reported that the National Activity Index (CFNAI) increased to 4.11 during June from 3.50 in May, revised from 2.61. It had fallen to -18.09 in April. The three-month moving average of the index improved m/m to -3.49 from -6.36 in May. During the last 20 years, there has been a 72% correlation between the Chicago index and the q/q change in real GDP.
Performance amongst the four components of the index was mixed last month. The Production series improved markedly to 2.22. It had increased to 0.84 in May after falling to a record low of -5.77 in April. The Employment, Unemployment & Hours series held fairly steady at 1.74, but was greatly improved versus April's record low of -8.82. Working the other way, the Personal Consumption & Housing gauge eased m/m to 0.40 from 0.89. It remained up sharply, however, versus April's low of -1.28. Also deteriorating m/m, the Sales, Orders and Inventories index turned negative, but less so than in April.
The diffusion index of the CFNAI, which measures the breadth of component change, improved to a neutral 0.00, which was the strongest signal since January.
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.
These figures are available in Haver's SURVEYS database.
Federal Reserve Bank of Chicago | Jun | May | Apr | Jun '19 | 2019 | 2018 | 2017 |
---|---|---|---|---|---|---|---|
National Activity Index (+ = Growth Above Trend) | 4.11 | 3.50 | -18.09 | 0.13 | -0.14 | 0.12 | 0.15 |
Production & Income | 2.22 | 0.84 | -5.77 | 0.03 | -0.10 | 0.07 | 0.07 |
Employment, Unemployment & Hours | 1.74 | 1.73 | -8.82 | 0.02 | 0.01 | 0.09 | 0.07 |
Personal Consumption & Housing | 0.40 | 0.89 | -1.28 | -0.03 | -0.02 | -0.04 | -0.04 |
Sales, Orders & Inventories | -0.24 | 0.04 | -2.22 | 0.11 | -0.03 | 0.01 | 0.05 |
3-Month Moving Average | -3.49 | -6.36 | -7.52 | -0.19 | -- | -- | -- |
Diffusion Index | 0.00 | -0.45 | -0.59 | -0.07 | -0.07 | 0.19 | 0.17 |