The Chicago Fed National Activity Index (CFNAI) rose to +0.10 in April, up from a reading of –0.55 in March. The gains were tied to production-related indicators, but the Chicago Fed said that all four of the broad categories of indicators that make up the index increased from March. That being said, three of the four categories made what are called non-positive contributions (meaning they were still negative) to the index in April.
Economists and investors know that this is a national economic reading, despite being compiled by a regional Fed branch. Also, we are already getting other economic reports from May when this report covers April.
Additional data inside the report was shown as follows:
- The index’s three-month moving average decreased to –0.22 in April from –0.18 in March.
- April’s three-month average suggests that growth in national economic activity was somewhat below its historical trend.
- Economic growth reflected in this level of the three-month average suggests subdued inflationary pressure from economic activity over the coming year.
- The CFNAI Diffusion Index, which is also a three-month moving average, increased to –0.17 in April from –0.22 in March.
- Forty-five of the 85 individual indicators made positive contributions to the CFNAI in April, and there were 40 individual indicators that made negative contributions.
- Fifty-four indicators improved from March to April, while 31 indicators deteriorated. Of the indicators that improved, 16 made negative contributions.
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What this index measures: 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 also to have a standard deviation of one). A positive index reading corresponds to growth above trend, while an index reading that is negative will correspond to growth below trend.
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