Chicago Fed Index Slips in August – Employment Indicators Held Back Index
The Chicago Fed National Activity Index (CFNAI) was -0.90 in August, down from the revised -0.56 reading in July. The 3-month moving average improved to -1.09 during August vs. -1.61 in July. Readings of the 3-month moving average of the CFNAI that are below -0.70 following a period of economic expansion point to a recessionary phase. The 3-month moving average of the CFNAI has improved from -3.63 in January 2009.
In August, production-related indicators made a small positive contribution of +0.29, while the employment-related indicators fell in August, largely due to the 9.7% jobless rate compared with 9.4% unemployment rate in July. The consumption and housing indicators improved slightly in August (-0.48 vs. -0.49 in July).
By contrast the Index of Leading Economic Indicators of the Conference Board rose 0.6% in August, marking the fifth consecutive monthly increase. The conflicting messages are expected given the composition and objective of each index. It is important to note that economic reports in the months ahead are most likely to be of the sort showing three steps forward and one step backward.
