The Chicago Fed national activity index (CFNAI) is down to minus 0.40 in October after minus 0.27 in September. The October reading is below the consensus of 0.00 (zero) in the Econoday survey of forecasters. The four broad categories of indicators that make up the index show 0 positive and 4 negative contributions in October. Among the categories 0 increased and 4 decreased.

The index has been in negative territory for the past five months and continues to signal below average growth. The Chicago Fed notes,"Periods of economic expansion have historically been associated with values of the CFNAI Diffusion Index above 0.35." Although the reading in October is below the threshold that signals recession, there are short-term factors that may make this a one-off. Mainly the two major hurricanes in late September and early October cut into industrial production, home building, and consumer behavior, and affected employment. These are likely to fade in October and rebound in November.

Production-related indicators are down to minus 0.25 in October after minus 0.23 in September. Sales, orders, and inventories are down to 0.12 in October after minus 0.01 in the prior month. Employment-related indicators are down to 0.12 in October after minus 0.01 in September. Indicators for personal consumption and housing are down to minus 0.01 in October after positive 0.02 one month ago.
The three-month moving average CFNAI in October is minus 0.24 compared to minus 0.21 in the prior month.

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.