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Chicago Fed National Activity Index points to slower economic growth in December
Led by declines in production-related indicators, the Chicago Fed National Activity Index (CFNAI) fell to –0.35 in December from +0.41 in November. Three of the four broad categories of indicators that make up the index decreased from November, and three of the four categories made negative contributions to the index in December. The index’s three-month moving average, CFNAI-MA3, moved up to –0.23 in December from –0.31 in November.
The CFNAI Diffusion Index, which is also a three-month moving average, edged down to –0.27 in December from –0.25 in November. Twenty-five of the 85 individual indicators made positive contributions to the CFNAI in December, while 60 made negative contributions. Twenty-seven indicators improved from November to December, while 56 indicators deteriorated and two were unchanged. Of the indicators that improved, ten made negative contributions.
Production-related indicators contributed –0.26 to the CFNAI in December, down from +0.40 in November. Industrial production decreased 0.3 percent in December after increasing 0.8 percent in November. The contribution of the sales, orders, and inventories category to the CFNAI edged down to –0.05 in December from –0.02 in November. The Institute for Supply Management’s Manufacturing New Orders Index moved down to 46.8 in December from 47.2 in the previous month.
Employment-related indicators contributed –0.06 to the CFNAI in December, down from +0.04 in November. Nonfarm payrolls increased by 145,000 in December after rising by 256,000 in November. The contribution of the personal consumption and housing category to the CFNAI edged up to +0.03 in December from –0.01 in November. Housing starts increased to 1,608,000 annualized units in December from 1,375,000 in November.
The CFNAI was constructed using data available as of January 17, 2020. At that time, December data for 49 of the 85 indicators had been published. For all missing data, estimates were used in constructing the index. The November monthly index value was revised to +0.41 from an initial estimate of +0.56, and the October monthly index value was revised to –0.74 from last month’s estimate of –0.76. 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 revisions to both the November and October monthly index values were primarily due to the former.
Posted: January 22, 2020 Wednesday 08:30 AM