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Chicago Fed National Activity picked up slightly in January
Led by improvements in production-related indicators, the Chicago Fed National Activity Index (CFNAI) edged up to +0.13 in January from –0.07 in December. Three of the four broad categories of indicators that make up the index increased from December, and only one of the four categories made a negative contribution to the index in January.
The index’s three-month moving average, CFNAI-MA3, ticked down to +0.33 in January from +0.34 in December. January’s CFNAI-MA3 suggests that growth in national economic activity was above its historical trend. The economic growth reflected in this level of the CFNAI-MA3 suggests modest inflationary pressure from economic activity over the coming year.
The CFNAI Diffusion Index, which is also a three-month moving average, increased slightly to +0.20 in January from +0.16 in December. Forty-eight of the 85 individual indicators made positive contributions to the CFNAI in January, while 37 made negative contributions. Forty-three indicators improved from December to January, while 42 indicators deteriorated. Of the indicators that improved, 14 made negative contributions.
Employment-related indicators contributed +0.18 to the CFNAI in January, down from +0.28 in December. Nonfarm payrolls increased by 257,000 in January, after rising by 329,000 in the previous month; and the unemployment rate ticked up to 5.7 percent in January from 5.6 percent in December.
Production-related indicators made a contribution of +0.02 to the CFNAI in January, up from –0.22 in December. Industrial production increased 0.2 percent in January after declining 0.3 percent in the previous month, and manufacturing production increased 0.2 percent in January after being unchanged in December. The contribution of the sales, orders, and inventories category to the CFNAI increased to +0.03 in January from a neutral reading in December.
The contribution of the consumption and housing category to the CFNAI increased to –0.10 in January from –0.13 in December.
Consumption indicators improved, on balance, pushing the category higher. However, housing permits decreased to 1,053,000 annualized units in January from 1,060,000 in December, and housing starts decreased to 1,065,000 annualized units in January from 1,087,000 in the previous month.
The CFNAI was constructed using data available as of February 19, 2015. At that time, January data for 51 of the 85 indicators had been published. For all missing data, estimates were used in constructing the index. The December monthly index was revised to –0.07 from an initial estimate of –0.05. 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 December monthly index was due mostly to the former.
Posted: February 23, 2015 Monday 08:30 AM