July 2017 Chicago Fed National Activity Index

Economic output moved roughly in-line with its historical trend in July according to data from the Chicago Fed National Activity Index (CFNAI). This comprehensive gauge of the economy declined to -0.01 as the second half of 2017 got underway, down from +0.16 in June. A reading of zero suggests America is moving right along the recent trend, so the negative sign is not alarming since it is in front of such small number. However, the recent weakness was widespread.

Three of the four broad categories deteriorated in the period. Production-related indicators decreased to -0.02 from +0.03 in June. The sales, orders, and inventories category contributed -0.01 to CFNAI, down from +0.06 a month earlier. Personal consumption and housing edged higher to -0.06 from -0.07, an improvement, but the total remains below zero. Finally, employment managed to keep its positive sign, adding +0.09 to the tally, but this is below the previous reading of +0.13.

Of the 85 individual components within the CFNAI, 42 made positive contributions, while 43 were attached to negative signs. Forty indicators improved in the period while 45 deteriorated. Of those that improved, 14 made negative contributions nonetheless.
Monthly totals for this indicator can be erratic and are always subject to revisions, so Atlas prefers to look at the three-month moving average in order to filter out some of the noise. Most recently, this trend level declined to -0.06 from +0.01 in June. While it is never encouraging to see it drop below zero, this average would need to fall to a level more than ten times lower than its current reading before it signals trouble. For now it continues to appear that America remains in the virtuous portion of the business cycle.