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Chicago Fed National Activity Index suggests economic growth increased further in June
Led by improvements in production- and employment-related indicators, the Chicago Fed National Activity Index (CFNAI) increased to +4.11 in June from +3.50 in May. Three of the four broad categories of indicators used to construct the index made positive contributions in June, and two of the four categories increased from May. The index’s three-month moving average, CFNAI-MA3, moved up to –3.49 in June from –6.36 in May.
The CFNAI Diffusion Index, which is also a three-month moving average, moved up to a neutral value in June from –0.45 in May. Fifty-four of the 85 individual indicators made positive contributions to the CFNAI in June, while 31 made negative contributions. Fifty-one indicators improved from May to June, while 34 indicators deteriorated. Of the indicators that improved, 14 made negative contributions.
Production-related indicators contributed +2.22 to the CFNAI in June, up from +0.84 in May. Industrial production rose 5.4 percent in June after increasing 1.4 percent in May. The contribution of the sales, orders, and inventories category to the CFNAI moved down to –0.24 in June from +0.04 in May.
Employment-related indicators contributed +1.74 to the CFNAI in June, up slightly from +1.73 in May. Nonfarm payrolls rose by 4.8 million in June after increasing by 2.7 million in May, and initial unemployment insurance claims declined by 849,000 in June after falling by 2.2 million in the previous month. The contribution of the personal consumption and housing category to the CFNAI decreased to +0.40 in June from +0.89 in May.
The CFNAI was constructed using data available as of July 20, 2020. At that time, June data for 50 of the 85 indicators had been published. For all missing data, estimates were used in constructing the index. The May monthly index value was revised to +3.50 from an initial estimate of +2.61, and the April monthly index value was revised to –18.09 from last month’s estimate of –17.89. 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 May and April monthly index values were primarily due to the latter.
Posted: July 21, 2020 Tuesday 08:30 AM