US: Chicago Fed National Activity Index

Tue Nov 21 07:30:00 CST 2017

Consensus Consensus Range Actual Previous Revised
Level 0.20 0.05 to 0.25 0.65 0.17 0.36
3 Month Moving Average 0.28 -0.16 0.01

The national activity index shot to a far higher-than-expected 0.65 in October with the 3-month average moving from flat to 0.28. The latest level is an expansion high and the 3-month average is near one, both pointing to economic growth that is significantly stronger than average.

But behind the strength are September and October hurricane reversals from August's Texas hit by Harvey. Industrial production fell sharply in August then rebounded in September and then rebounded very strongly in October. The report's three other components are steady with both employment and sales, orders & inventories making slightly smaller contributions and with personal consumption & housing pulling down growth slightly more.

Putting production aside, this report continues to run at a modest pace. But indications from the factory sector have been increasingly promising and do hint at production-driven acceleration for fourth-quarter growth.

Market Consensus Before Announcement
The big jump in both industrial production and payroll growth will be key positives for the national activity index where Econoday's consensus is plus 0.20 vs September's 0.17 rise. This index has been soft, underperforming what has been a solid year for economic growth.

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.