Led by improvements in production-related indicators, the Chicago Fed National Activity Index rose to +0.16 in June from -0.56 in May. Three of the four broad categories of indicators that make up the index increased from May, and two of the four categories made positive contributions to the index in June.
The index’s three-month moving average, CFNAI-MA3, increased to -0.12 in June from -0.39 in May. June’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 -0.16 in June from -0.38 in May. Forty of the 85 individual indicators made positive contributions to the CFNAI in June, while 45 made negative contributions. Fifty-eight indicators improved from May to June, while 27 indicators deteriorated. Of the indicators that improved, 19 made negative contributions.
The contribution from production-related indicators to the CFNAI rose to +0.18 in June from -0.29 in May. Total industrial production rose by 0.6 percent in June after falling by 0.3 percent in May, and manufacturing production increased by 0.4 percent in June after a 0.3 percent reduction in the previous month. The sales, orders, and inventories category made a neutral contribution to the CFNAI in June, up slightly from -0.04 in May.
Employment-related indicators contributed +0.06 to the CFNAI in June, up from -0.14 in May. Nonfarm payrolls rose by 287,000 in June after increasing by only 11,000 in the previous month. However, the civilian unemployment rate rose to 4.9 percent in June from 4.7 percent in May.
The contribution of the personal consumption and housing category to the CFNAI was steady at -0.08 in June. Housing permits increased slightly to 1,153,000 annualized units in June from 1,136,000 in May; and housing starts moved up a little to 1,189,000 annualized units in June from 1,135,000 in the previous month.
