Chicago Fed National Activity Index Sees Uptick
- Jun 25, 2013
The Chicago Fed reported on Monday that its National Activity Index (CFNAI) increased to –0.30 in May from –0.52 in April, noting that production- and employment-related indicators drove the uptick. Production indicators were at –0.10 for May, compared with –0.33 in April, and employment indicators were +0.01 in May, compared with –0.06 the month before.
The negative CFNAI readings mean that the national economy is still growing below its historical average, according to the Chicago Fed’s reckoning. But since the index is closer to zero (the historic average), that points to some economic expansion in the last month. The index is a weighted average of 85 indicators of national economic activity drawn from four broad categories, namely production and income; employment, unemployment and hours; personal consumption and housing; and sales, orders and inventories.
The index’s three-month moving average, the ponderously named CFNAI-MA3, decreased to –0.43 in May from –0.13 in April, marking its third consecutive reading below zero and its lowest level since October 2012. May’s reading, according to the Fed, suggests that growth in national economic activity was below its historical trend for most of early 2013. The economic growth reflected by CFNAI-MA3 also suggests subdued inflationary pressure this year.
Regional Fed reports surprise on the upside
The Federal Reserve of Dallas released a different kind of report on Monday, one covering Texas factory activity, which was up sharply in June, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose six points to 17.1, posting its highest reading in more than two years. Perceptions of broader business conditions rebounded strongly in June in Texas as well. The general business activity index rose to 6.5 after posting negative readings in April and May.
The report might only apply to Texas—whose economy has been strengthened by the energy boom, among other factors–but it’s also the third regional Fed report in June (the Philly Business Outlook Survey was last week, the Empire State Manufacturing Survey before that). All three pointed to higher than expected economic expansion, so Texas isn’t unique in that regard.
Wall Street continued on a downward course on Monday after taking a breather on Friday, with the Dow Jones Industrial Average down 139.84 points, or 0.94 percent. The Nasdaq was off 1.21 percent and the Nasdaq was down 1.09 percent.
Other markets worldwide were also down for the trading day on Monday, more (perhaps) because of signs of a weakening Chinese economy than the (now) old news of the Fed’s intention to taper QE3. The Shanghai Composite was down 5.3 percent, and the Hang Seng lost 2.2 percent, for instance.