Chicago Fed National Index Slumps to Negative 0.63

The Chicago Fed national activity index for June dropped to negative 0.63 from a revised reading of positive 0.31 in May, which originally was reported as positive 0.21.

The three-month moving average slumped to negative 0.05 in June from May’s revised positive 0.31 reading, which was initially reported as positive 0.28, the Federal Reserve Bank of Chicago announced Monday.

The index was negative 1.72 in June 2009, while the moving average  was negative 2.11.

June’s slightly negative reading for the moving average indicates national economic growth is near its historical trend, suggesting subdued inflationary pressure from economic activity in the coming year.

The June production indicators contributed negative 0.11 to the index, down from a contribution of 0.61 the month before. Employment-related indicators contributed negative 0.13 after posting a positive 0.08 in May, the Fed said.

Consumption and housing-related data contributed negative 0.43 in June after contributing negative 0.45 in May. Sales, orders and inventories contributed positive 0.05 in June following a positive 0.06 contribution the previous month.

The index is a weighted average of 85 indicators of national economic activity. It’s constructed to have an average value of zero and a standard deviation of one. A zero value for the index indicates the national economy is expanding at its historical trend rate of growth; negative values are associated with below-trend growth, while positive values indicate above-trend growth.

Overall, 36 of the 85 indicators made positive contributions to the Chicago Fed index in the month and 49 made negative contributions.

Fifty-six indicators deteriorated from May to June.

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