Led by improvements in production-related indicators, the Chicago Fed National Activity Index rose to +0.27 in July from +0.05 in June. Three of the four broad categories of indicators that make up the index increased from June, and three of the four categories made positive contributions to the index in July.
The index’s three-month moving average, CFNAI-MA3, increased to -0.10 in July from -0.19 in June. July’s CFNAI-MA3 suggests that growth in national economic activity was slightly below its historical trend. The economic growth reflected in this level of the CFNAI-MA3 suggests subdued inflationary pressure from economic activity over the coming year.
The CFNAI Diffusion Index, which is also a three-month moving average, moved up to -0.02 in July from -0.16 in June. Fifty-three of the 85 individual indicators made positive contributions to the CFNAI in July, while 32 made negative contributions. Forty-nine indicators improved from June to July, while 36 indicators deteriorated. Of the indicators that improved, 11 made negative contributions.
The contribution from production-related indicators to the CFNAI rose to +0.23 in July from +0.07 in June. Manufacturing industrial production increased 0.5 percent in July after moving up 0.3 percent in June; and manufacturing capacity utilization increased to 75.4 percent in July from 75 percent in the previous month. The sales, orders, and inventories category made a contribution of +0.01 to the CFNAI in July, up slightly from -0.01 in June.
Employment-related indicators contributed +0.09 to the CFNAI in July, up from +0.05 in June. Civilian nonagricultural employment rose by 515,000 in July after increasing by 211,000 in the previous month. However, nonfarm payrolls increased by only 255,000 in July after rising by 292,000 in June.
The contribution of the personal consumption and housing category to the CFNAI was steady at -0.06 in July. Housing starts increased to 1,211,000 annualized units in July from 1,186,000 in June. However, housing permits decreased to 1,152,000 annualized units in July from 1,153,000 in the previous month.
