US: Chicago Fed National Activity Index

Mon Nov 23 07:30:00 CST 2015

Actual Previous Revised
Level -0.04 -0.37 -0.29
3 Month Moving Average -0.20 -0.09 -0.03

October was a soft month for the economy but solidly improved from September, based on the national activity index which is at minus 0.04 vs September's revised minus 0.29. October's improvement is centered in the key component of employment, at plus 0.11 vs September's minus 0.06. The gain reflects the month's very strong 271,000 rise in nonfarm payrolls and the 1 tenth downtick in the unemployment rate to 5.0 percent.

Turning to the three other components, manufacturing was also a plus for October, from minus 0.17 in September to minus 0.05 and reflecting the related component gain in the industrial production report. The sales/orders/inventories component was little changed, at minus 0.01, as was personal consumption & housing at minus 0.09.

The improvement in October, however, did not lift the 3-month average, at minus 0.20 vs a revised minus 0.03 in September in a reminder that the nation's economic growth remains, by historical standards, sub-par.

The Chicago Fed National Activity Index (CFNAI) is a monthly index designed to better gauge overall economic activity and inflationary pressure. The CFNAI is released at 8:30 a.m. E.T. normally toward the end of each calendar month. The CFNAI is a weighted average of 85 existing monthly indicators of national economic activity. It is constructed to have an average value of zero and a standard deviation of one. Since economic activity tends toward trend growth rate over time, a positive index reading corresponds to growth above trend and a negative index reading corresponds to growth below trend.

The 85 economic indicators that are included in the CFNAI are drawn from four broad categories of data: production and income; employment, unemployment, and hours; personal consumption and housing; and sales, orders, and inventories. Each of these data series measures some aspect of overall macroeconomic activity. The derived index provides a single, summary measure of a factor common to these national economic data.

This index is unique among regional Federal Reserve Bank indexes in that it is national in scope. Investors are eager to have insight into economic growth and inflation. This index combines 85 diverse and already released indicators from four broad categories -- production and income; employment, unemployment, and hours; personal consumption and housing; and sales, orders, and inventories -- into an overall index to measure economic performance. The index provides another measure with which investors can measure overall growth.