Growth Pace of U.S. Economic Activity Ticks Up in October -- Chicago Fed
By Xavier Fontdegloria
The U.S. economy expanded at an above-average rate in October at
a quicker pace than that of the previous month, signaling the
economy entered the fourth quarter on a stronger footing, data from
the Federal Reserve Bank of Chicago showed Monday.
The Chicago Fed National Activity Index stood at 0.83 in
October, up from an upwardly revised 0.32 in September. The figure
is above economists' consensus, who polled by FactSet expected the
indicator to be at 0.23.
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. The
rates of increase have been diminishing over the months, although
October's reading marked a slight pick up in activity.
Three of the four broad categories of indicators used to
construct the index made positive contributions to it in October,
and three of the four categories increased from the prior month,
the Chicago Fed said.
Sixty-one of the 85 individual indicators made positive
contributions to the CFNAI in October, while 24 made negative
contributions. Fifty-four indicators improved from September to
October, while 30 indicators deteriorated and one was
Production-related indicators contributed 0.36 points to the
CFNAI in October, up from minus 0.10 in September. Manufacturing
production increased 1% in October after edging up 0.1 percent in
September, and manufacturing capacity utilization increased by 0.7
percentage points in October after edging up by 0.1 percentage
points in the previous month.
Employment-related indicators contributed 0.39 points to the
CFNAI in October, up slightly from 0.30 in September. Nonfarm
payrolls increased by 638,000 in October after rising by 672,000 in
September, but the unemployment rate fell by one percentage point
in October after decreasing by 0.5 percentage points in the
The personal consumption and housing category to the CFNAI moved
down to minus 0.01 points in October from 0.12 points in
Sales, orders and inventories category contributed 0.08 points
in October from a neutral value in the prior month.
The CFNAI diffusion index was down to 0.51 in October from 0.55
in September. 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
The index's three-month moving average, the CFNAI-MA3, slowed to
0.75 in October from 1.37 in September. 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 growth.
Write to Xavier Fontdegloria at firstname.lastname@example.org
(END) Dow Jones Newswires
November 23, 2020 09:03 ET (14:03 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.