Chicago Fed Index Remains Stablein May At Highest Level Since October

The National Activity Index published by the Chicago Federal Reserve Bank remained roughly unchanged during May versus April. Nevertheless, the index level of -2.30 was near its the highest level since October of last year. The latest figure was up from the series' low of -3.99 reached this past January. Since 1970 there has been a 75% correlation between the level of the index and the q/q change in real GDP.

The three-month moving average of the index rose slightly versus April and stood at its highest level since November.

An index level at or below -0.70 typically has indicated negative U.S. economic growth. A zero value of the CFNAI indicates that the economy is expanding at its historical trend rate of growth of roughly 3%. The complete CFNAI report is available here and the historical figures are available in Haver's SURVEYS database.

The Bank reported that fifteen of the 85 individual indicators made positive contributions to the index in May while 70 made a negative contribution. The employment-related components made the largest positive contributions to the May CFNAI.

The CFNAI is a weighted average of 85 indicators of economic activity. The indicators reflect activity in the following categories: production & income, the labor market, personal consumption & housing, manufacturing & trade sales, and inventories & orders.

In a separate survey, the Chicago Fed indicated that its Midwest manufacturing index fell during April to its lowest level since 1994. Indicators for the steel, machinery and the auto sectors fell to new lows but in the resource sector the figure rose slightly.

Fuel efficiency challenges the auto industry from the Federal Reserve Bank of Chicago can be found here.

Residential Housing and Personal Bankruptcy from the Federal Reserve Bank of Philadelphia is available here.

The European Commission's Business Climate Indicator for the Euro Area is designed to deliver a clear and early assessment of the cyclical situation. The extent that it has done so in the past can be seen in the first chart that shows the Indicator and the year to year change in industrial production. With a correlation between the two series of 90%, the R-Square is 81%, indicating that the business climate indicator accounts for about 81% of the changes in the industrial production. The rise in the indicator for the third successive month in June is a good sign, but it is still at an historically low level.

The individual results of the surveys of industry, the construction, services, and retail trade businesses are reported as a percent balances between those expecting improving and those expecting deteriorating conditions in important aspects of business, such as orders, production outlook, inventories, etc. Except for construction, the other businesses have shown improvements over the last few months as can be seen in the second chart.