Led by improvements in production-related indicators, the Chicago Fed National Activity Index edged up to +0.13 in January from –0.07 in December. Three of the four broad categories of indicators that make up the index increased from December, and only one of the four categories made a negative contribution to the index in January.
The index’s three-month moving average, CFNAI-MA3, ticked down to +0.33 in January from +0.34 in December. January’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, increased slightly to +0.20 in January from +0.16 in December. Forty-eight of the 85 individual indicators made positive contributions to the CFNAI in January, while 37 made negative contributions. Forty-three indicators improved from December to January, while 42 indicators deteriorated. Of the indicators that improved, 14 made negative contributions.
Production-related indicators made a contribution of +0.02 to the CFNAI in January, up from –0.22 in December. Industrial production increased 0.2 percent in January after declining 0.3 percent in the previous month, and manufacturing production increased 0.2 percent in January after being unchanged in December. The contribution of the sales, orders, and inventories category to the CFNAI increased to +0.03 in January from a neutral reading in December.
Employment-related indicators contributed +0.18 to the CFNAI in January, down from +0.28 in December. Nonfarm payrolls increased by 257,000 in January, after rising by 329,000 in the previous month; and the unemployment rate ticked up to 5.7 percent in January from 5.6 percent in December.
The contribution of the consumption and housing category to the CFNAI increased to –0.1 in January from –0.13 in December. Consumption indicators improved, on balance, pushing the category higher. However, housing permits decreased to 1,053,000 annualized units in January from 1,060,000 in December, and housing starts decreased to 1,065,000 annualized units in January from 1,087,000 in the previous month.
