Chicago Fed National Activity Index June 2015

America’s output in June 2015 was roughly in line with the recent trend according to the Chicago Fed’s National Active Index (CFNAI).  After contracting 0.17 in May, this indicator moved back above zero to 0.08 as the first half of the year came to a close.  The economy’s expansion is continuing.

Internals were mixed.  Production output improved by being less negative than a month earlier; industrial production helped the uptick after taking from the total in May.  Employment added 0.12 to the total, accelerating from 0.06 a month earlier.  Unfortunately, consumption figures deteriorated.

Most of the 85 components remained positive in the period and a small majority of them improved versus May’s tally.  Forty-eight of the individual indicators made positive contributions while 37 were negative.  Forty-four improved from a month earlier, 40 declined, and one was unchanged.  Of the indicators that were higher, 13 still made negative contributions.

It is helpful to look at the 3-month moving average of this indicator because it has so many moving parts that are capable of making statistical noise on a monthly basis.  This average gives clues into inflationary pressures and risks of recession.  With a reading of 0.19, June’s moving average is not signaling either.  During an expansion, an average above 0.7 can signal upward price pressures while a count below -0.7 is seen as signaling contraction.  For now, both worrisome marks are far away for this economy.     (by C. Cox)