Led by declines in production-related indicators, the Chicago Fed National Activity Index (CFNAI) fell to –0.05 in December from +0.92 in November. None of the four broad categories of indicators that make up the index increased from November, and two of the four categories made negative contributions to the index in December.
The index’s three-month moving average, CFNAI-MA3, moved down to +0.39 in December from +0.54 in November. December’s CFNAI-MA3 suggests that growth in national economic activity was above its historical trend. The economic growth reflected in this level of the CFNAI-MA3 suggests modest inflationary pressure from economic activity over the coming year.
The CFNAI Diffusion Index, which is also a three-month moving average, decreased to +0.25 in December from +0.37 in November. Forty of the 85 individual indicators made positive contributions to the CFNAI in December, while 45 made negative contributions. Thirty-three indicators improved from November to December, while 52 indicators deteriorated. Of the indicators that improved, 14 made negative contributions.
Production-related indicators made a contribution of –0.12 to the CFNAI in December, down from +0.71 in November. Industrial production decreased 0.1 percent in December after moving up 1.3 percent in November, and manufacturing production increased 0.3 percent in December after a gain of 1.3 percent in the previous month. However, manufacturing capacity utilization remained at 78.4 percent in December.
Employment-related indicators contributed +0.16 to the CFNAI in December, down somewhat from +0.21 in November. Nonfarm payrolls increased by 252,000 in December, down from a gain of 353,000 in the previous month. However, the unemployment rate decreased to 5.6 percent in December from 5.8 percent in November.
The contribution of the sales, orders, and inventories category to the CFNAI remained at +0.03 in December. The contribution of the consumption and housing category to the CFNAI decreased to –0.12 in December from –0.03 in November.
Housing permits decreased to 1,032,000 annualized units in December from 1,052,000 in November. However, housing starts increased to 1,089,000 annualized units in December from 1,043,000 in the previous month.
