US: Chicago Fed National Activity Index

Mon Apr 23 07:30:00 CDT 2018

Consensus Consensus Range Actual Previous Revised
Level 0.29 0.20 to 0.50 0.10 0.88 0.98
3 Month Moving Average 0.27 0.37 0.31

A drag from employment made for abrupt slowing in the national activity index which came in at plus 0.10 percent for March vs February's upward revised and very strong 0.98. Employment, one of four components in this report, pulled the headline index down 0.70 points in March reflecting a steep slowing in nonfarm payrolls to 103,000 vs February's 326,000. The production component also slowed March's results but still contributed 0.14 points to the headline index. Sales, orders, inventories contributed slightly less to March while personal consumption & housing, which has been weak, improved slightly and held down the March index only fractionally.

Winter months can often be bumpy given the outsized effects of seasonal adjustments during this period. But looking at the 3-month average shows steady growth for this index, at 0.27 and only slightly lower than February's 0.31. Watch Friday for the first estimate on first-quarter GDP where the consensus is looking for modest-to-moderate strength.

Market Consensus Before Announcement
Retail sales were solid in March as were building permits as well as mining and utility production which will all be positives for the national activity index. Not much of a positive, however, was a marginal rise in manufacturing production nor the slim 103,000 increase in nonfarm payrolls which will both hold back the month's results. The index is expected to come in at 0.29 vs February's very strong 0.88.

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.