Chicago Fed National Activity Index Improves to a Still-Negative Level in May
Summary
- CFNAI -0.28 in May; -0.36 in April.
- Two of four CFNAI components up m/m, but three make negative contributions.
- Personal Consumption & Housing index falls to -0.12, a four-month low.
- CFNAI-MA3 drops to -0.16, the first negative figure since Jan.; still above -0.70 (recession signal).
The Chicago Fed National Activity Index (CFNAI) was at -0.28 in May, up from -0.36 in April (-0.25 initially) and down from +0.16 in March (+0.03 previously), today’s report from the Federal Reserve Bank of Chicago showed. The May CFNAI registered the second consecutive negative reading following two positive figures; it was down from its recent high of +0.39 in February, +0.16 in May 2024, and a high of +0.37 in February 2024.
The index's three-month moving average (CFNAI-MA3), which smooths out the m/m volatility in the index, decreased to -0.16 in May after holding at +0.06 in April (+0.05 initially), posting the first negative reading since January and the lowest since November; it was slightly below -0.14 in May 2024. The CFNAI-MA3 is expressed in standard deviation units from zero (with a value of zero defined as trend real GDP growth). Research at the Chicago Fed indicates that an average reading of -0.70 or below is consistent with the economy being in a recession. Therefore, the May reading confirmed that the U.S. economy is not currently in a recession.
The May negative reading reflected m/m increases in two of the four CFNAI key components and three negative contributions. The contribution of the Production & Income index moved up to -0.11 in May from -0.18 in April; it was down from its recent high of +0.33 in February and +0.12 in May 2024 but above a low of -0.59 in December 2022. The contribution of the Sales, Orders & Inventories index improved to a neutral value (0.00) in May after dropping to -0.14 in April; it was marginally down from +0.01 in May 2024 but above a low of -0.26 in January 2024. Meanwhile, the Employment, Unemployment & Hours index contributed -0.05 in May, down from -0.02 in April and +0.02 in May 2024. The contribution of the Personal Consumption & Housing index to the CFNAI fell to -0.12 in May, the lowest reading since January, after falling to -0.03 in April; it was also down from +0.02 in May 2024 and a high of +0.17 in January 2023.
The CFNAI Diffusion Index, which measures the breadth of change in the component series and is also a three-month moving average, fell to -0.24 in May, the lowest reading since November, from -0.03 in April (-0.05 initially) and a neutral value (0.00) in March (-0.02 previously). A reading of zero indicates that all of the indicators are growing at their long-term average. The May reading was down from its recent high of +0.16 in February and -0.14 in May 2024 but above a low of -0.34 in October 2023.
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.
These figures are available in Haver's SURVEYS database.
Winnie Tapasanun
AuthorMore in Author Profile »Winnie Tapasanun has been working for Haver Analytics since 2013. She has 20+ years of working in the financial services industry. As Vice President and Economic Analyst at Globicus International, Inc., a New York-based company specializing in macroeconomics and financial markets, Winnie oversaw the company’s business operations, managed financial and economic data, and wrote daily reports on macroeconomics and financial markets. Prior to working at Globicus, she was Investment Promotion Officer at the New York Office of the Thailand Board of Investment (BOI) where she wrote monthly reports on the U.S. economic outlook, wrote reports on the outlook of key U.S. industries, and assisted investors on doing business and investment in Thailand. Prior to joining the BOI, she was Adjunct Professor teaching International Political Economy/International Relations at the City College of New York. Prior to her teaching experience at the CCNY, Winnie successfully completed internships at the United Nations. Winnie holds an MA Degree from Long Island University, New York. She also did graduate studies at Columbia University in the City of New York and doctoral requirements at the Graduate Center of the City University of New York. Her areas of specialization are international political economy, macroeconomics, financial markets, political economy, international relations, and business development/business strategy. Her regional specialization includes, but not limited to, Southeast Asia and East Asia. Winnie is bilingual in English and Thai with competency in French. She loves to travel (~30 countries) to better understand each country’s unique economy, fascinating culture and people as well as the global economy as a whole.
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