Chicago Fed: National Economy Improving, but Weakness Prevails

Two of the four broad categories of indicators that make up the CFNAI were higher in June versus May, and two of the four categories were weaker for the month. The three-month moving average for the CFNAI also suggests that growth in national economic activity was below its historical trend with subdued inflationary pressure.

The Chicago Fed said:

The CFNAI Diffusion Index increased to –0.03 in June from –0.19 in May. Forty-one of the 85 individual indicators made positive contributions to the CFNAI in June, while 44 made negative contributions. Forty-two indicators improved from May to June, while 41 indicators deteriorated and two were unchanged. Of the indicators that improved, 13 made negative contributions.

• Production-related indicators contributed +0.04 to the CFNAI in June, up from –0.12 in May.
• Employment-related indicators contributed +0.06 to the CFNAI in June, up from a neutral reading in May.
• The contribution from the consumption and housing category to the CFNAI decreased to –0.19 in June from –0.15 in May.

This reading is less covered than many other national numbers, and there are overlaps between this economic report and others. The index is a weighted average of 85 indicators of national economic activity drawn from four broad categories of data: 1) production and income; 2) employment, unemployment and hours; 3) personal consumption and housing; and 4) sales, orders and inventories. A zero value for the index indicates that the national economy is expanding at its historical trend rate of growth; negative values indicate below-average growth, and positive values indicate above-average growth.