Chicago Fed National Activity Index Points to Slower Economic Growth in January

Led by declines in production-related indicators, the CFNAI fell to –0.43 in January from +0.05 in December.

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Led by declines in production-related indicators, the Chicago Fed National Activity Index (CFNAI) fell to –0.43 in January from +0.05 in December. One of the four broad categories of indicators that make up the index decreased from December, and two of the four categories made negative contributions to the index in January. The index’s three-month moving average, CFNAI-MA3, decreased to a neutral reading in January from +0.16 in December.

The CFNAI Diffusion Index, which is also a three-month moving average, decreased slightly to +0.09 in January from +0.18 in December. Thirty-five of the 85 individual indicators made positive contributions to the CFNAI in January, while 50 made negative contributions. Thirtyeight indicators improved from December to January, while 46 indicators deteriorated and one was unchanged. Of the indicators that improved, 11 made negative contributions.

The contribution from production-related indicators to the CFNAI decreased to –0.45 in January from +0.08 in December. Industrial production fell by 0.6 percent in January after edging up 0.1 percent in December. The sales, orders, and inventories category made a contribution of +0.02 to the CFNAI in January, up slightly from a neutral contribution in December. The Institute for Supply Management’s Manufacturing New Orders Index increased to 58.2 in January from 51.3 in December.

Employment-related indicators contributed +0.05 to the CFNAI in January, up slightly from +0.02 in December. Total nonfarm payrolls rose by 304,000 in January after increasing by 222,000 in the previous month. However, the unemployment rate increased to 4.0 percent in January from 3.9 percent in December. The contribution of the personal consumption and housing category to the CFNAI edged up to –0.04 in January from –0.06 in December.

The CFNAI was constructed using data available as of February 21, 2019. At that time, January 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 December monthly index value was revised to +0.05 from an initial estimate of +0.27, and the November monthly index value was revised to +0.36 from last month’s estimate of +0.21. 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 December and November monthly index values were primarily due to the former. (It is likely that monthly index values back to November will be further revised as data releases delayed by the shutdown become available.)

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