U.S. Economic Activity Rebounded Sharply in March -- Chicago Fed
By Xavier Fontdegloria
U.S. economic activity grew in March after falling the previous
month amid strong production, personal consumption and housing
data, the Federal Reserve Bank of Chicago said Thursday.
The Chicago Fed National Activity Index rose to 1.71 in March
from a revised minus 1.20 in February. The figure, which is the
highest since July 2020, beats economists' consensus, who polled by
FactSet expected the indicator to come in at 0.90.
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.
March's CFNAI reading matches with the sharp economic
improvement in the month confirmed by strong hard data such as
retail sales, industrial production or payroll creation. U.S.
economic activity is poised to accelerate in the next months as the
Covid-19 pandemic eases and fiscal stimulus feeds through,
All four broad categories of indicators used to construct the
index made positive contributions to it in March, and all four
categories increased from the prior month, the Chicago Fed
Seventy of the 85 individual indicators made positive
contributions to the CFNAI in March, while 15 made negative
contributions. Sixty-nine indicators improved compared with the
previous month, while 16 worsened.
The rise in the headline index was driven mainly by
production-related indicators and the personal consumption and
housing category, the data showed.
Production-related indicators contributed 0.63 points in March,
up from minus 1.04 in February. Manufacturing production rose 2.7%
in March after falling 3.7% in February, while manufacturing
capacity utilization increased by 1.9 percentage points.
The personal consumption and housing category also contributed
0.63 points to the CFNAI in March, up from minus 0.21 in February.
The indicators in this category broadly improved from February, the
The contribution of the employment, unemployment and hours
category to the index increased to 0.34 points in March from 0.12
in February. Nonfarm payrolls rose by 916,000 in March after
increasing by 468,000 in February, and the unemployment rate
decreased by 0.2 percentage points.
The contribution of the sales, orders, and inventories category
moved up to 0.11 points in March from minus 0.06 in February.
The CFNAI diffusion index was up to 0.40 in March from 0.22 in
February. 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 growth.
The index's three-month moving average, the CFNAI-MA3, climbed
to 0.54 in March from 0.07 in February. 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
April 22, 2021 08:44 ET (12:44 GMT)
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