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Chicago Fed National Activity Index Suggests Economic Growth Increased in October
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Led by improvements in production-related indicators, the Chicago Fed National Activity Index (CFNAI) increased to +0.83 in October from +0.32 in September. Three of the four broad categories of indicators used to construct the index made positive contributions in October, and three of the four categories increased from September. The index’s three-month moving average, CFNAI-MA3, fell to +0.75 in October from +1.37 in September.
The CFNAI Diffusion Index, which is also a three-month moving average, edged down to +0.51 in October from +0.55 in September. Sixty-one of the 85 individual indicators made positive contributions to the CFNAI in October, while 24 made negative contributions. Fifty-four indicators improved from September to October, 30 indicators deteriorated, and one was unchanged. Of the indicators that improved, eight made negative contributions.
Production-related indicators contributed +0.36 to the CFNAI in October, up from –0.10 in September. Manufacturing production increased 1.0 percent in October after edging up 0.1 percent in September, and manufacturing capacity utilization increased by 0.7 percentage points in October after edging up by 0.1 percentage points in the previous month. The contribution of the sales, orders, and inventories category to the CFNAI increased to +0.08 in October from a neutral value in September.
Employment-related indicators contributed +0.39 to the CFNAI in October, up slightly from +0.30 in September. Nonfarm payrolls increased by 638,000 in October after rising by 672,000 in September, but the unemployment rate fell by 1 percentage point in October after decreasing by 0.5 percentage points in the previous month. The contribution of the personal consumption and housing category to the CFNAI moved down to –0.01 in October from +0.12 in September.
The CFNAI was constructed using data available as of November 19, 2020. At that time, October data for 51 of the 85 indicators had been published. For all missing data, estimates were used in constructing the index. The September monthly index value was revised to +0.32 from an initial estimate of +0.27, and the August monthly index value was revised to +1.10 from last month’s estimate of +1.11. Revisions to the monthly index can be attributed to two main factors: revisions in previously published data and differences between the estimates of previously unavailable data and subsequently published data. The revision to the September monthly index value was primarily due to the former, while the revision to the August monthly index value was primarily due to the latter.
Posted: November 23, 2020 Monday 08:30 AM