This morning, the Federal Reserve Bank of Chicago released June 2010 figures for the Chicago Fed National Activity Index (CFNAI), a measure of how the national economy is faring relative to its historical trend rate. Drops in three of the four major indicator groups caused the three-month moving average (CFNAI-MA3) to decrease to -0.05 in June, a sharp contrast from May’s +0.31 figure. According to a Federal Reserve Bank of Chicago news release, this suggests that “growth in national economic activity returned very close to its historical trend in June after reaching its highest level since March 2006 in May.” (When the CFNAI-MA3 moves above -0.70 following a period of economic contraction, there is an increasing likelihood that a recession has ended; surpassing a level of +0.20 indicates economic activity associated with sustained recovery).
Note: The index was constructed using data available as of 07/22/10. At that time, June data for 52 of the 85 indicators had been published. For all missing data, estimates were used in constructing the index and CFNAI-MA3.
Source: Federal Reserve Bank of Chicago
Of the 85 indicators that contribute to the index (production/income indicators, sales/orders/inventories indicators, employment/unemployment/hours indicators, and personal consumption/housing indicators):
- 36 made positive contributions, while 49 made negative contributions; 29 improved from May to June 2010, while 56 deteriorated.
- The sales, orders, and inventories category was the only positive contributor to the index in June, showing an increase of +0.05.
- Industrial production increased by 0.1% in June, following a 1.3% increase in May; however, manufacturing production declined by 0.4%, bringing down June’s overall production-related indicators’ index contribution to -0.11.
- The personal consumption and housing category continued to be negative in June (-0.43), improving only slightly over May’s figure of -0.45.
- Employment-related indicators contributed -0.13 to the index in June, after boosting the index by +0.08 in May. Much of this is attributed to a decline of 125,000 in nonfarm payroll employment in June, following an increase of 433,000 in May.
The full news release can be found on the Federal Reserve Bank of Chicago website.
