Chicago Fed Nat'l Activity Index Remains Negative in June
by:Tom Moeller
|in:Economy in Brief
Summary
• Two of four components decline.
• Three-month index average turns negative.
The Federal Reserve Bank of Chicago reported that the Chicago Fed National Activity Index (CFNAI) held steady during June at -0.19. The May reading was revised from 0.01.
The index's three-month moving average fell to -0.04 from 0.09 in May. It was the first negative reading since June 2020. During the last 10 years, there has been 76% correlation between the change in the Chicago Fed Index and quarterly growth in real GDP.
Two of the four major components of the index were negative last month. The Production & Income reading of -0.20 last month compared to -0.17 in May. That was below 0.23 in April. The Personal Consumption & Housing index of -0.06 in June compared to -0.08 in the prior month. Remaining positive at 0.05 was the Employment, Unemployment & Hours figure which was little changed m/m, but down from a recent high of 0.33 in February. The Sales, Orders & Inventories reading improved to 0.03 from -0.01 in May.
The diffusion index, which measures the breadth of movement in the component series, fell to -0.04 during June after having reached a high of 0.46 just six months earlier. Forty-one of the index components contributed positively to the June index while 42 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 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 CFNAI was constructed using data available as of March 17, 2022. February data for 50 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.
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
More Economy in Brief
Global