U.S. Economic Activity Expands Above-Average in September But Loses Steam --Chicago Fed
By Xavier Fontdegloria
The U.S. economy continued to expand at an above-average rate in
September but growth lost steam compared with previous months, data
from the Federal Reserve Bank of Chicago showed Monday.
The Chicago Fed National Activity Index stood at 0.27 in
September, down from an upwardly revised 1.11 in August. The figure
came in below economists' consensus, who polled by FactSet expected
the indicator to be at 0.73.
The CFNAI is composed of 85 economic indicators drawn from four
broad categories of data: production and income; employment,
unemployment and hours; personal consumption and housing; and
sales, orders and inventories. A positive index reading corresponds
to growth above trend and a negative index reading corresponds to
growth below trend.
The index, which plunged to its lowest reading ever in April
amid the first wave of the coronavirus pandemic, rebounded strongly
in May and June as restrictions eased and the economy reopened.
However, the rates of increase have been diminishing over the
months, signaling that the initial strong rebound is fading.
Three of the four broad categories of indicators used to
construct the index made positive contributions to it in September,
and three of the four categories decreased from the prior month,
the Chicago Fed said.
Fifty of the 85 individual indicators made positive
contributions to the CFNAI in September, while 35 made negative
contributions. Forty indicators improved from August to September,
while 45 indicators deteriorated.
Production-related indicators contributed negatively to the
index, by minus 0.24 points, down from 0.31 in August, as
industrial production contracted by 0.6% in September.
Employment-related indicators contributed 0.35 points to the
index, down from 0.71 in August. Nonfarm payrolls moved up by
661,000 in September--less than the 1.5 million registered in
August-- and the unemployment rate fell by 0.5 percentage point in
September, less than the 1.8 percentage point decline the previous
The personal consumption and housing category contributed
positively to the CFNAI, by 0.09 points, as housing starts
Sales, orders and inventories category ticked down to 0.07
points in September from 0.1 in August, the Chicago Fed said.
The CFNAI diffusion index was also down to 0.51 in September
from 0.71 in August. Despite the fall, the reading still signals
that national economic growth is increasing, as it is above the
minus 0.35 level that historically has been associated with periods
of economic growth.
The index's three-month moving average, the CFNAI-MA3, eased to
1.33 from 3.22 in August. Month-to-month movements can be volatile,
as it has occurred during the coronavirus pandemic, so the
indicator provides a more consistent picture of national economic
growth. In line with the diffusion index, the CFNAI-MA3 signals the
economy is in expansion territory, as a value above minus 0.70 has
been associated with an increasing likelihood of economic
Write to Xavier Fontdegloria at firstname.lastname@example.org
(END) Dow Jones Newswires
October 26, 2020 08:44 ET (12:44 GMT)
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