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Chicago Fed National Activity Index moved lower in December
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Led by declines in employment-related indicators, the Chicago Fed National Activity Index decreased to –0.61 in December, down from –0.39 in November. Three of the four broad categories of indicators that make up the index moved lower, although both the production and income category and the sales, orders, and inventories category made positive contributions.
In contrast to the monthly index, the index’s three-month moving average, CFNAI-MA3, increased slightly to –0.61 in December from –0.68 in November. December’s CFNAI-MA3 suggests that growth in national economic activity was below its historical trend; but the level of activity remained in a range historically consistent with the early stages of a recovery following a recession. With regard to inflation, the amount of economic slack reflected in the CFNAI-MA3 indicates low inflationary pressure from economic activity over the coming year.
The decline in the monthly index was driven mainly by decreases in employment-related indicators. These indicators as a group made a contribution of –0.27 to the index in December, down from –0.11 in November. Payroll employment declined by 85,000 in December after increasing by 4,000 in November; however, the unemployment rate was unchanged at 10.0%.
Most of the weakness in the index continued to stem from the consumption and housing category. This category’s contribution to the index was –0.50 in December, down slightly from –0.46 in November. Housing starts declined to 557,000 annualized units in December from 580,000 in November. Partially offsetting this was an increase in building permits to 653,000 annualized units in December from 589,000 in the previous month.
Production-related indicators made a positive contribution to the index for the sixth consecutive month. As a group, they contributed +0.13 to the index in December, compared with +0.25 in November. Manufacturing industrial production was unchanged in December after increasing 0.9 percent in November; but total industrial production increased 0.6 percent for the second consecutive month.
Posted: January 28, 2010 Thursday 08:30 AM