Chicago Fed National Activity Index
Growth remained below historical trend in July but only slightly. The Chicago Fed’s national activity index improved to minus 0.06 from an upwardly revised minus 0.38 in June (minus 0.46 first reported). The improvement is led by a plus 0.28 contribution from production-related indicators, well up from a very slight plus 0.03 contribution in June. Employment-related indicators came in at plus 0.05 vs June’s minus 0.10. Consumption & housing was minus 0.33 in July, barely changed from minus 0.34 in June. Sales, orders & inventories are a negative in the month, at minus 0.06 vs June’s plus 0.03.
The three-month moving average improved sharply in July, to minus 0.29 from minus 0.54 (upwardly revised from minus 0.60). Improvement in this report is of course welcome but whether it will extend into this month is uncertain given that July’s strength is concentrated in manufacturing where early indications for August, that is from last week’s Empire State and Philly Fed reports, are decidedly weak.
The Chicago Fed National Activity Index (CFNAI) is a monthly index designed to better gauge overall economic activity and inflationary pressure. The CFNAI is a weighted average of 85 existing 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. (Federal Reserve Bank of Chicago) Why Investors Care