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Economy in Brief

Chicago Fed National Activity Index Remains Positive in September
by Tom Moeller  October 24, 2022

• Figures reverse negative Q2 readings.

• Three-month average improves.

The Federal Reserve Bank of Chicago reported that the Chicago Fed National Activity Index (CFNAI) held steady m/m at 0.10 in September. The August reading of 0.10 was revised from 0.00, and July was unrevised at 0.29. The Q2 average remained in negative territory.

The index's three-month moving average improved to 0.17 in September after 0.04 in August. The figure was down from a recent high of 0.48 in December, 2021. During the last 10 years, there has been 79% correlation between the change in the Chicago Fed Index and quarterly growth in real GDP.

The Production & Income reading of 0.07 last month compared to -0.02 in August and 0.17 in July. It remained below this year's high of 0.31 in February. The Employment, Unemployment & Hours component edged up to 0.06 from -0.05 in August. It remained down from the high of 0.33 in February. To the downside, Sales, Orders and Inventories declined to -0.01 from +0.15 in August. Despite the decline, the quarterly average improved versus Q2. The Personal Consumption & Housing index eased to -0.01 from +0.02, and left the quarterly average roughly unchanged from it Q2 level.

The diffusion index, which measures the breadth of movement in the component series, rose to 0.35 during September from 0.16 in August. These readings compare to a low of -0.12 in June. Forty-eight of the components contributed positively to the September index while 37 contributed negatively.

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 moves 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 October 20, 2022. September data for 51 of the 85 indicators had been published at that time. For all missing data, estimates were used in constructing the index.

The index is constructed by the Federal Reserve Bank of Chicago. These figures are available in Haver's SURVEYS database.

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