US: Chicago Fed National Activity Index

Mon Jan 22 07:30:00 CST 2018

Consensus Consensus Range Actual Previous Revised
Level 0.25 -0.15 to 0.36 0.27 0.15 0.11
3 Month Moving Average 0.42 0.41 0.43

Mining and utility output helped drive the national activity index to 0.27 in December vs a revised 0.11 percent in November and October's revised 0.87 outsized gain in a month that reflected the reversal of hurricane effects. October's gain is inflating the 3-month average which is up slightly at 0.42.

December's contribution from the production component jumped to 0.25 from November's minus 0.02 as mining and utilities, up a monthly 1.6 and 5.6 percent in the industrial production report, offset a soft 0.1 percent gain for manufacturing. The sales, orders & inventories component contributed 0.08 to December's headline gain, up from November's 0.04, and together with production offset weakness in employment, at plus 0.01 vs November's plus 0.12, and also personal consumption & housing, at minus 0.07 vs minus 0.03 with the report citing a step back in housing starts as the main factor for December's decline.

Putting mining and utilities aside, this report is mixed given the weakness in manufacturing, employment and also the housing reading.

Market Consensus Before Announcement
The economy is solid based on the national activity index which firmed through the second half of 2017 and included a 0.15 gain in November. Retail sales are likely to be a positive in the December report with building permits neutral. The manufacturing component of the industrial production report is a likely weakness. The consensus for December's national activity index is 0.25.

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.