According to the Chicago Fed's National Activity Index, September economic activity slowed from the previous month, now at -0.56. The indicator has been negative (meaning below-trend growth) for six of the past eight months, and the all-important 3-month moving average has been negative for all eight of those months and 21 of the last 27 months. Here are the opening paragraphs from the report:
Led by declines in production-related indicators, the Chicago Fed National Activity Index (CFNAI) decreased to –0.56 in October from 0.00 in September. All four broad categories of indicators that make up the index decreased from September, and only two made positive contributions to the index in October.
The index's three-month moving average, CFNAI-MA3, decreased from –0.36 in September to –0.56 in October — its eighth consecutive reading below zero. October's CFNAI-MA3 suggests that growth in national economic activity was below its historical trend. The economic growth reflected in this level of the CFNAI-MA3 suggests subdued inflationary pressure from economic activity over the coming year.
The CFNAI Diffusion Index also moved down in October, decreasing to –0.32 from –0.14 in September. Thirty-one of the 85 individual indicators made positive contributions to the CFNAI in October, while 54 made negative contributions. Thirty-three indicators improved from September to October, while 51 indicators deteriorated and one was unchanged. Of the indicators that improved, 13 made negative contributions. [Download PDF News Release]
Elsewhere in the PDF report it is noted that Hurricane Sandy negatively affected industrial production in October.
The Chicago Fed's National Activity Index (CFNAI) is a monthly indicator designed to gauge overall economic activity and related inflationary pressure. It is a composite of 85 monthly indicators as explained in this background PDF file on the Chicago Fed's website. The index is constructed so a zero value for the index indicates that the national economy is expanding at its historical trend rate of growth. Negative values indicate below-average growth, and positive values indicate above-average growth.
The first chart below shows the recent behavior of the index since 2007. The red dots show the indicator itself, which is quite noisy, together with the 3-month moving average (CFNAI-MA3), which is more useful as an indicator of the actual trend for coincident economic activity. As we can readily see, the CFNAI-MA3 trend since February of this year has been one of slow economic contraction.
For a broad historical context, here is the complete CFNAI historical series dating from March 1967.
