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Chicago Fed National Activity picked up in January
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Led by improvements in production-related indicators, the Chicago Fed National Activity Index (CFNAI) rose to +0.28 in January from –0.34 in December. Two of the four broad categories of indicators that make up the index increased from December, and two of the four categories made positive contributions to the index in January.
The index’s three-month moving average, CFNAI-MA3, increased to –0.15 in January from –0.30 in December. January’s CFNAI-MA3 suggests that growth in national economic activity was somewhat below its historical trend. The economic growth reflected in this level of the CFNAI-MA3 suggests subdued inflationary pressure from economic activity over the coming year.
The CFNAI Diffusion Index, which is also a three-month moving average, ticked up to –0.11 in January from –0.17 in December. Thirty-nine of the 85 individual indicators made positive contributions to the CFNAI in January, while 46 made negative contributions. Forty-five indicators improved from December to January, while 39 indicators deteriorated and one was unchanged. Of the indicators that improved, 14 made negative contributions.
The contribution from production-related indicators to the CFNAI increased to +0.27 in January from –0.38 in December. Industrial production increased by 0.9 percent in January after declining by 0.7 percent in December. Moreover, manufacturing production increased by 0.5 percent in January after decreasing by 0.2 percent in the previous month. The sales, orders, and inventories category made a contribution of –0.03 to the CFNAI in January, up slightly from –0.04 in December.
The contribution from employment-related indicators to the CFNAI moved down to +0.12 in January from +0.16 in December. Nonfarm payrolls increased by 151,000 in January after increasing by 262,000 in December. However, the unemployment rate ticked down to 4.9 percent in January from 5.0 percent in the previous month.
The contribution of the personal consumption and housing category to the CFNAI was unchanged at –0.08 in January. Housing starts decreased somewhat—to 1,099,000 annualized units in January from 1,143,000 in December. Housing permits also moved down a little—to 1,202,000 annualized units in January from 1,204,000 in the previous month.
The CFNAI was constructed using data available as of February 18, 2016. 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 value was revised to –0.34 from an initial estimate of –0.22. Revisions to the monthly index value 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 value was due primarily to the former.
Posted: February 22, 2016 Monday 08:30 AM