Chicago Fed Sees Slower National Economic Growth in February

Monday’s economic report schedule was led by the Chicago Fed National Activity Index (CFNAI), which showed that economic growth slowed in February. This report does have close to a one-month look back at this point. Still, the CFNAI was led lower by declines in production-related indicators.

The CFNAI fell to –0.29 in February from +0.41 in January. On top of the index going into the red, all four broad index categories that make up the index fell in February from January. Also noted was that three of the four categories made negative contributions to the index  in February.

Bloomberg had the consensus estimate higher for a positive reading of 0.25. The Econoday range featured by Bloomberg was 0.25 to 0.28 for February.

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.
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It may stand out that the index’s three-month moving average managed to tick higher to –0.07 in February from –0.12 in January. Still, February’s three-month average suggests that growth in national economic activity was slightly below its historical trend. Monday’s report said:

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, ticked down to –0.10 in February from –0.07 in January. Twenty-seven of the 85 individual indicators made positive contributions to the CFNAI in February, while 58 made negative contributions. Twenty-nine indicators improved from January to February, while 55 indicators deteriorated and one was unchanged. Of the indicators that improved, 17 made negative contributions.

The CFNAI 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.

This is one of those economic reports that usually do not whip the markets around. However, this was a big drop into red territory when a positive reading was expected. More recent economic reports suggest slightly better readings so far.