US: Chicago Fed National Activity Index

Mon Oct 23 07:30:00 CDT 2017

Consensus Consensus Range Actual Previous Revised
Level -0.10 -1.70 to 0.09 0.17 -0.31 -0.37
3 Month Moving Average -0.16 -0.04 -0.16

The national activity index improved noticeably in September, to 0.17 from a revised minus 0.37 in August. The biggest difference comes from production indicators which reserved a minus 0.33 showing in August, one due in part to one-time effects from Hurricane Harvey, to a gain of 0.10. Employment contributed 0.06, up from August's 0.01, as a sharp drop in the unemployment rate to 4.2 percent offset a 33,000 decline in nonfarm payrolls. Sales, orders & inventories were once again a moderate plus and personal consumption & housing a moderate minus. Despite September's overall improvement, the 3-month average, pulled down by the sharp weakness in August, held at minus 0.16 which is the weakest reading for what has been a weak year for this indicator.

Market Consensus Before Announcement
Hurricanes scrambled September's economic data pointing to uncertain results for the national activity index. Employment was sharply mixed with payrolls posting a rare decline while at the same time the unemployment rate and wage data showed strength. Retail sales soared on replacement demand for vehicles while the manufacturing component of the industrial production report posted no better than a marginal increase. Forecasters see national activity coming in at minus 0.10 in September vs minus 0.31 in August though the range of estimates is wide, from minus 1.70 to plus 0.09.

The Chicago Fed National Activity Index (CFNAI) is a monthly index that tracks overall economic activity and inflationary pressures. 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 over time, a positive index reading corresponds to growth above trend and a negative index reading corresponds to growth below trend.

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.