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.