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Chicago Fed National Activity Index Suggests a Pickup in Economic Growth in July
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Led by improvements in production-related indicators, the Chicago Fed National Activity Index (CFNAI) increased to +0.53 in July from –0.01 in June. Three of the four broad categories of indicators used to construct the index made positive contributions in July, and three categories improved from June. The index’s three-month moving average, CFNAI-MA3, moved up to +0.23 in July from +0.01 in June.
The CFNAI Diffusion Index, which is also a three-month moving average, increased to +0.28 in July from +0.05 in June. Fifty-six of the 85 individual indicators made positive contributions to the CFNAI in July, while 29 made negative contributions. Forty-seven indicators improved from June to July, while 38 indicators deteriorated. Of the indicators that improved, 12 made negative contributions.
Production-related indicators contributed +0.38 to the CFNAI in July, up from –0.09 in June. Manufacturing production rose 1.4 percent in July after decreasing 0.3 percent in the previous month. The contribution of the sales, orders, and inventories category to the CFNAI increased to +0.02 in July from –0.06 in June.
The contribution of the employment, unemployment, and hours category to the CFNAI increased to +0.30 in July from +0.14 in June. The unemployment rate decreased to 5.4 percent in July from 5.9 percent in June, and nonfarm payrolls rose by 943,000 in July after increasing by 938,000 in the previous month. The personal consumption and housing category contributed –0.15 to the CFNAI in July, down from +0.01 in June. Personal consumption indicators broadly deteriorated from June.
The CFNAI was constructed using data available as of August 19, 2021. At that time, July data for 51 of the 85 indicators had been published. For all missing data, estimates were used in constructing the index. The June monthly index value was revised to –0.01 from an initial estimate of +0.09, and the May monthly index value was revised to +0.15 from last month’s estimate of +0.26. 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 June monthly index value was primarily due to the former, while the revision to the May monthly index value was primarily due to the latter.
Posted: August 23, 2021 Monday 08:30 AM