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Chicago Fed National Activity Index Suggests a Pickup in Economic Growth in May
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Led by improvements in production-related indicators, the Chicago Fed National Activity Index (CFNAI) increased to +0.29 in May from –0.09 in April. Three of the four broad categories of indicators used to construct the index made positive contributions in May, and three categories improved from April. The index’s three-month moving average, CFNAI-MA3, rose to +0.81 in May from +0.17 in April.
The CFNAI Diffusion Index, which is also a three-month moving average, moved up to +0.39 in May from +0.16 in April. Fifty-five of the 85 individual indicators made positive contributions to the CFNAI in May, while 30 made negative contributions. Fifty-seven indicators improved from April to May, while 27 indicators deteriorated and one was unchanged. Of the indicators that improved, 15 made negative contributions.
Production-related indicators contributed +0.29 to the CFNAI in May, up from –0.05 in April. Industrial production rose 0.8 percent in May after moving up 0.1 percent in April. The contribution of the sales, orders, and inventories category to the CFNAI increased to +0.02 in May from –0.06 in April.
The personal consumption and housing category contributed –0.18 to the CFNAI in May, down from –0.04 in April. The personal consumption indicators in this category broadly deteriorated, while the housing indicators generally improved from April. The contribution of the employment, unemployment, and hours category to the CFNAI increased to +0.16 in May from +0.06 in April. Nonfarm payrolls rose by 559,000 in May after increasing by 278,000 in April, and the unemployment rate decreased by 0.3 percentage points in May.
The CFNAI was constructed using data available as of June 17, 2021. At that time, May data for 51 of the 85 indicators had been published. For all missing data, estimates were used in constructing the index.
The April monthly index value was revised to –0.09 from an initial estimate of +0.24, and the March monthly index value was revised to +2.22 from last month’s estimate of +1.71. 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 April monthly index value was primarily due to the former, while the revision to the March monthly index value was primarily due to the latter.
In addition, this month we updated the CFNAI-MA3 and Inflation Cycles figure below to reflect recent readings of core inflation (which excludes food and energy prices). For further details, see pp. 4–5 of the background information document. More than two years into an economic expansion, an increasing likelihood of a period of sustained increasing inflation has historically been associated with values of the CFNAI-MA3 above +0.70.
Posted: June 21, 2021 Monday 08:30 AM