U.S. Economic Activity Ticks Up in December -- Chicago Fed
By Xavier Fontdegloria
The U.S. economy gained steam in December compared with the
previous month, driven by an acceleration of production-related
indicators, data from the Federal Reserve Bank of Chicago showed
The Chicago Fed National Activity Index came in at 0.52 in
December, up from 0.31 in November and pointing to an uptick in
economic growth in the month. The figure is above economists'
consensus, who polled by FactSet expected the indicator to be at
The CFNAI index 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 increase of the index in December comes after it registered
a decline in November amid the resurgence of Covid-19 across the
Three of the four broad categories of indicators used to
construct the index made positive contributions to it in December,
but three of the four categories decreased from the prior month,
the Chicago Fed said.
Fifty-three of the 85 individual indicators made positive
contributions to the CFNAI in December, while 32 made negative
contributions. Forty-five indicators improved from November to
December, while 40 indicators deteriorated.
Production-related indicators drove the uptick of the headline
index, contributing 0.44 points to the CFNAI in December, up from
0.13 in November. Industrial production rose 1.6% in December after
increasing 0.5% in November.
Employment-related indicators contributed 0.13 points to the
CFNAI in December, down slightly from 0.15 in November, as nonfarm
payrolls fell by 95,000 in December after rising by 417,000 the
Consumption indicators weakened, pushing down the category's
overall contribution in December. The personal consumption and
housing category decreased to minus 0.09 from minus 0.06 the prior
month, the data showed.
Sales, orders and inventories category also moved down,
contributing 0.05 points in December from 0.09 points the prior
The CFNAI diffusion index was down marginally to 0.54 in
December from 0.55 in November. The reading 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
The index's three-month moving average, the CFNAI-MA3, increased
to 0.61 in December from 0.59 in November. Month-to-month movements
can be volatile, 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
January 25, 2021 08:44 ET (13:44 GMT)
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