The Chicago Fed National Activity Index for August slipped to negative 1.59 from a revised negative 0.93 reading in July, originally reported as negative 0.67.

Meanwhile, the three-month moving average — CFNAI-MA3 — dropped to negative 1.09 in August from July’s revised negative 0.92 reading, initially reported as negative 0.80, the Federal Reserve Bank of Chicago reported yesterday.

In August 2007, the index was negative 0.76, while the CFNAI-MA3 was negative 0.30.

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 August CFNAI-MA3 reading was the ninth straight month the index was below negative 0.70, indicating “an increasing likelihood that a recession has begun,” the Fed said.

Production-related indicators contributed negative 0.75 to the index compared to a contribution of negative 0.13 in July, while employment-related indicators contributed negative 0.49 after providing a negative 0.44 in July.

Consumption and housing-related data contributed negative 0.27 in August after contributing negative 0.33 previous month, while sales, orders, and inventories contributed negative 0.08 after a negative 0.02 contribution in July.

The index is a weighted average of 85 indicators of national economic activity. 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 while positive values indicate above-trend growth.

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