The Chicago Fed National Activity Index was negative 2.57 in September, down from negative 1.61 in August. Most of the index’s decline in September was driven by the steep drop in industrial production, as reflected in the contribution of the production and income category of indicators. However, all four broad categories of indicators made negative contributions to the index in September.
The three-month moving average, CFNAI-MA3, decreased to negative 1.78 in September from negative 1.18 in August. The negative value suggests that growth in national economic activity was below its historical trend, and marks the 10th consecutive month that the CFNAI-MA3 has indicated an increasing likelihood that a recession has begun. With regard to inflation, September’s three-month moving average indicates low inflationary pressure from economic activity over the coming year.
The sharp decline in the monthly index was driven primarily by the production and income category. This category made a contribution of negative 1.60 to the index in September, following a contribution of negative 0.67 in August. Total industrial production declined 2.8% in September after decreasing 1.0% the previous month. Temporary disruptions in production due to recent hurricanes accounted for most of the decline in total industrial output in September.
Employment-related indicators contributed negative 0.55 to the index in September, the same as they did in August. Total nonfarm payroll employment declined by 159,000 in September after decreasing 73,000 in August, but the unemployment rate held steady at 6.1% in September.
