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Chicago Fed National Activity moderated in March
Led by declines in production-related indicators, the Chicago Fed National Activity Index (CFNAI) decreased to +0.20 in March from +0.53 in February. Two of the four broad categories of indicators that make up the index made positive contributions to the index in March, and two of the four categories decreased from February.
The index’s three-month moving average, CFNAI-MA3, increased to a neutral reading in March from –0.14 in February, marking its third consecutive nonpositive value. March’s CFNAI-MA3 suggests that growth in national economic activity was at its historical trend. The economic growth reflected in this level of the CFNAI-MA3 suggests limited inflationary pressure from economic activity over the coming year.
The CFNAI Diffusion Index increased to +0.04 in March from –0.14 in February. Fifty-one of the 85 individual indicators made positive contributions to the CFNAI in March, while 34 made negative contributions. Thirty-three indicators improved from February to March, while 51 indicators deteriorated and one was unchanged. Of the indicators that improved, nine made negative contributions.
Production-related indicators contributed +0.21 to the CFNAI in March, down from +0.54 in February. Industrial production increased 0.7 percent in March after rising 1.2 percent in February, and manufacturing output moved up 0.5 percent in March after increasing 1.4 percent in the previous month.
Employment-related indicators contributed +0.14 to the CFNAI in March, up from +0.07 in February. Average weekly initial claims for unemployment insurance decreased to 320,900 in March from 336,900 in February. Civilian employment increased 0.3 percent in March after roughly no change in February, while nonfarm payrolls increased 0.1 percent in March for the second straight month.
The contribution from the consumption and housing category to the CFNAI moved up to –0.13 in March from –0.17 in February. Housing starts increased to 946,000 annualized units in March from 920,000 in February, but housing permits declined to 990,000 annualized units in March from 1,014,000 in the previous month. The contribution from the sales, orders, and inventories category to the CFNAI decreased to –0.02 in March from +0.08 in February.
The CFNAI was constructed using data available as of April 16, 2014. At that time, March data for 50 of the 85 indicators had been published. For all missing data, estimates were used in constructing the index. The February monthly index was revised to +0.53 from an initial estimate of +0.14. 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 February monthly index was due primarily to the former. The unusually large revisions to the recent history of the CFNAI reflected in this release resulted primarily from the annual revision to the Federal Reserve Board’s industrial production and capacity utilization data.
Posted: April 21, 2014 Monday 08:30 AM