Chicago Fed National Activity Index Increases for 6th Straight Month

The Chicago Fed National Activity Index was –0.74 in July, up from –1.82 in June. All four broad categories of indicators improved in July, while three of the four continued to make negative contributions to the index. Production-related indicators made a positive contribution to the index for the first time since October 2008 and for only the second time since December 2007.

The three-month moving average, CFNAI-MA3, was –1.69 in July, up from –2.18 in the previous month. July’s CFNAI-MA3 suggests that growth in national economic activity was below its historical trend. With regard to inflation, the amount of economic slack reflected in the CFNAI-MA3 indicates low inflationary pressure from economic activity over the coming year.

The improvement in the index in July was due in large part to the production and income category of indicators. This category made a contribution of +0.26 to the index in July compared with –0.38 in June. Manufacturing production increased 1.0 percent in July, its biggest increase since December 2006, following a decline of 0.5% in the previous month. In addition, manufacturing capacity utilization increased to 65.4 in July from 64.7 in June.

MP: The Chicago Fed National Activity Index (CFNAI-MA3) has increased in each of the last six months, the first six consecutive monthly increase since the end of the 2001 recession, see bottom chart above.

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About Mark J. Perry 262 Articles

Affiliation: University of Michigan

Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan.

He holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University in Washington, D.C. and an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota.

Since 1997, Professor Perry has been a member of the Board of Scholars for the Mackinac Center for Public Policy, a nonpartisan research and public policy institute in Michigan.

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