The latest data from the Federal Reserve Bank of Chicago shows that U.S. economic growth experienced a slight decline in June. The Chicago Fed National Activity Index (CFNAI) decreased to minus 0.32, indicating that economic activity fell below its average historical trend.
Factors Affecting Economic Activity
The CFNAI index is composed of 85 economic indicators from four main categories:
- Production and Income
- Employment, Unemployment, and Hours
- Personal Consumption and Housing
- Sales, Orders, and Inventories
In June, production-related indicators had a negative impact on the index, contributing minus 0.27. Manufacturing production saw a slight decrease during this period.
On the other hand, employment-related indicators made a positive contribution of 0.03 to the index, reflecting a decrease in unemployment to 3.6% in June from 3.7% in May. This category was the only one to show expansion among the four broad categories.
The personal consumption and housing category contributed minus 0.02, while the sales, orders, and inventories contribution declined to minus 0.05.
CFNAI Diffusion Index and Moving Average
The CFNAI diffusion index, which measures the spread of the monthly index’s changes across the 85 indicators over three months, improved to minus 0.12 in June compared to minus 0.17 in May. Additionally, the index’s headline three-month moving average increased to minus 0.16 in June from minus 0.21 in the previous month.
These indicators suggest that the U.S. economy experienced overall expansion in June as they surpassed the historically associated values for economic growth (-0.35 and -0.70 respectively).
While U.S. economic growth slowed in June, there were positive trends seen in employment. The performance of manufacturing production and personal consumption and housing categories showed slight declines. However, overall expansion was evident in the U.S. economy during this period.