Chicago Fed National Activity Index Points to a Slight Increase in Economic Growth in December

The Chicago Fed National Activity Index (CFNAI) was +0.27 in December, up slightly from +0.21 in November.

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Led by improvements in production-related indicators, the Chicago Fed National Activity Index (CFNAI) moved up slightly to +0.27 in December from +0.21 in November. Two of the four broad categories of indicators that make up the index increased from November, and two of the four categories made positive contributions to the index in December. The index’s three-month moving average, CFNAI-MA3, edged up to +0.16 in December from +0.12 in November.

The CFNAI Diffusion Index, which is also a three-month moving average, edged up to +0.14 in December from +0.11 in November. Forty-six of the 85 individual indicators made positive contributions to the CFNAI in December, while 39 made negative contributions. Forty indicators improved from November to December, while 44 indicators deteriorated and one was unchanged. Of the indicators that improved, ten made negative contributions.

The contribution from production-related indicators to the CFNAI increased to +0.22 in December from +0.02 in November. Manufacturing industrial production rose 1.1 percent in December after edging up 0.1 percent in November. The sales, orders, and inventories category made a neutral contribution to the CFNAI in December, down from +0.12 in November. The Institute for Supply Management’s Manufacturing New Orders Index decreased to 51.1 in December from 62.1 in November.

Employment-related indicators contributed +0.11 to the CFNAI in December, up slightly from +0.10 in November. Total nonfarm payrolls rose by 312,000 in December after increasing by 176,000 in the previous month. However, the unemployment rate increased to 3.9 percent in December from 3.7 percent in November. The contribution of the personal consumption and housing category to the CFNAI edged down to –0.06 in December from –0.03 in November.

The CFNAI was constructed using data available as of January 24, 2019. At that time, December data for 45 of the 85 indicators had been published (fewer than usual because of the partial federal government shutdown). For all missing data, estimates were used in constructing the index. The November monthly index value was revised to +0.21 from an initial estimate of +0.22, and the October monthly index value was revised to +0.01 from last month’s estimate of 0.00. Revisions to the monthly index can be attributed to two main factors: revisions in previously published data and differences between the estimates of previously unavailable data and subsequently published data. Revisions to the November and October monthly index values were primarily due to the former. (These monthly index values are likely to be further revised as data releases delayed by the shutdown become available.)

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