U.S. Economic Growth Picked Up in May -- Chicago Fed
By Maria Martinez
U.S. economic activity grew in May, following a small decline in
the previous month, the Federal Reserve Bank of Chicago said
The Chicago Fed National Activity Index increased to 0.29 in May
from minus 0.09 in April. The reading is below economists'
consensus, who polled by FactSet expected the indicator to come in
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.
Three of the four broad categories of indicators used to
construct the index made positive contributions to it in May, and
three of the four categories improved from the prior month, the
Chicago Fed said.
Fifty-five of the 85 individual indicators made positive
contributions to the CFNAI in May, while 30 made negative
contributions. Fifty-seven indicators improved from April to May,
while 27 indicators deteriorated and one was unchanged.
The rise in the headline index was driven by production-related
indicators, which contributed 0.29 points, up from minus 0.05
points in April. Industrial production moved up 0.8% in May after
increasing 0.1% in April.
The contribution of the employment, unemployment and hours
category to the index rose to 0.16 points in May from 0.06 in
April, as nonfarm payrolls increased by 559,000 in May after rising
by 278,000 the prior month.
The contribution of the sales, orders and inventories category
to the CFNAI increased to 0.02 in May from minus 0.06 in April.
The personal consumption and housing category contributed minus
0.18 to the index in May, down from minus 0.04 in April. The
personal consumption indicators in this category broadly
deteriorated, while the housing indicators generally improved from
April, the Chicago Fed said.
The CFNAI diffusion index edged up to 0.39 in May from 0.16 in
April. 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, rose to
0.81 in May from 0.17 in April. 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 Maria Martinez at firstname.lastname@example.org
(END) Dow Jones Newswires
June 21, 2021 08:44 ET (12:44 GMT)
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