Chicago Fed Shows National Activity Is Slowing

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The Federal Reserve Bank of Chicago releases its nationally focused Chicago Fed National Activity Index (CFNAI) each month, and the reading for August was negative, after having been positive in July.

Thursday’s economic report showed that CFNAI was −0.55 in August. It had been +0.24 in July. The report also showed that all four broad categories that make up the index fell from July, and that all four categories made negative contributions to the index in August.

The index’s three-month moving average ticked up to –0.07 in August from –0.09 in July. The three-month average is shown to suggest that growth in national economic activity was slightly below its historical trend.

Only 19 of the 85 individual indicators made positive contributions to the CFNAI in August, and some 66 of them made negative contributions. Only 21 of the 85 indicators improved from July to August, while 63 indicators had deteriorated and one indicator was unchanged. And of the indicators that improved, 13 made negative contributions.

Thursday’s release also broke down several components individually for August, as follows:

The contribution from production-related indicators to the CFNAI fell to –0.33 in August from +0.15 in July. Industrial production moved down 0.4 percent in August after rising 0.6 percent in July; and manufacturing industrial production decreased 0.4 percent in August after increasing 0.4 percent in the previous month. The sales, orders, and inventories category made a contribution of –0.05 to the CFNAI in August, down from a neutral reading in July.

Employment-related indicators contributed –0.09 to the CFNAI in August, down from +0.15 in July. Nonfarm payrolls increased by 151,000 in August after rising by 275,000 in July; and civilian nonagricultural employment decreased by 37,000 in August after increasing by 515,000 in the previous month.

The contribution of the personal consumption and housing category to the CFNAI ticked down to –0.08 in August from –0.06 in July. Housing starts decreased to 1,142,000 annualized units in August from 1,212,000 in July, and housing permits edged down to 1,139,000 annualized units in August from 1,144,000 in the previous month.