The Chicago Fed National Activity Index for October rebounded to negative 1.06 from a revised negative 3.11 reading in September, originally reported as negative 2.57.
Meanwhile, the three-month moving average, or CFNAI-MA3, inched up to negative 2.09 in October from September’s revised negative 2.16 reading, initially reported as negative 1.78, the Federal Reserve Bank of Chicago reported yesterday.
In October 2007 the index was negative 0.75 and the CFNAI-MA3 was negative 0.59.
The negative reading for the CFNAI-MA3 indicates national economic growth was below its historical trend and suggests little inflationary pressure from economic activity in the coming year. The October CFNAI-MA3 reading was the second consecutive reading below negative 2, the first time it’s happened since 1982.
October’s CFNAI-MA3 was also the 10th out of the past 11 months the index was below negative 0.70, indicating “an increasing likelihood that a recession has begun,” the Fed said.
Production-related indicators contributed positive 0.14 to the index compared to a negative 1.98 in the previous month, while employment-related indicators contributed negative 0.70 after providing a negative 0.64 in September.
Consumption and housing-related data contributed negative 0.36 in October after contributing negative 0.43 the month before, while sales, orders, and inventories contributed negative 0.15 after a negative 0.06 contribution in September.
The index is a weighted average of 85 indicators of national economic activity, and is constructed to have an average value of zero and a standard deviation of one. A zero value for the index indicates that the national economy is expanding at its historical trend rate of growth, negative values are associated with below-trend growth, and positive values indicate above-trend growth.
Overall, 29 of the 85 indicators made positive contributions to the index in October and 56 made negative contributions. While 46 indicators were better than in September, 21 of these still made negative contributions to the index. In addition, 39 indicators deteriorated from September to October.
The index was constructed using data available by Nov. 20, with data for 52 of the 85 indicators having been published by then. The Fed said it used estimates for the missing data.
