Chicago Fed Nat'l Activity Index Remained Negative

The National Activity Index (CFNAI) from the Federal Reserve Bank of Chicago remained negative in October at -0.31, negative for the fifth month in the last six. The three-month moving average of the CFNAI dropped to -0.19, its lowest level since Hurricane Katrina depressed activity last year.

A zero value of the CFNAI indicates that the economy is expanding at its historical trend rate of growth and during the last twenty years there has been a 68% correlation between the level of the CFNAI and q/q growth in real GDP.

The CFNAI is a weighted average of 85 indicators of economic activity. The indicators reflect activity in the following categories: production and income, the labor market, personal consumption and housing, manufacturing and trade sales, and inventories & orders.

The complete CFNAI report is available here.

The latest Survey of Professional Forecasters from the Federal Reserve Bank of Philadelphia is available here.

The ICSC-UBS retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.

The leading indicator of chain store sales from ICSC-UBS added 0.5% (0.8% y/y) to the prior week's 0.8% jump.

Financial Markets and the Federal Reserve are remarks by Fed Governor Kevin M. Warsh at the New York Stock Exchange and they are available here.

As a small country with a population of only 4.2 million, migration in and out of New Zealand tends to amplify economic trends that would not be noticed in a larger country. The peripatetic New Zealanders frequently go to and from Australia and the UK staying a year or more. In recent years there has been an influx of students from Asia who also tend to stay for a period of years completing their education and then returning home. New Zealand tracks these movements and publishes monthly data on net permanent and long term migration. (Total net migration and net migration by country can be found in the Haver data base, ANZ.)

Net permanent and long-term migration is derived by subtracting permanent and long-term departures from permanent and long-term arrivals. Permanent and long- term arrivals include overseas migrants intending to stay for a period of twelve months or more or permanently, plus New Zealand residents returning after an absence of 12 months or more. Permanent and long-term departures include New Zealand residents intending to stay abroad for 12 months or more or permanently plus overseas visitors departing after a stay of 12 months or more.

As the first chart shows, year to year differences in net migration are largely responsible for the unusual ups and downs in the total population. The large influx of immigrants in 2001 and 2002 had a notable effect on the housing market as can be seen in the second chart that shows the year to year changes in housing prices and net migration. The decline in net migration has, in part, been a factor in the deceleration of GDP growth that has taken place since the end of 2004 as can be seen in the third chart.

Net migration varies from quarter to quarter but the downward trend started in late 2002 seems to have abated. In the third quarter of this year, net migration was 4,965, the highest quarterly figure since the first quarter of 2004. To the extent that migration matters, economic developments in New Zealand may be looking up.