By Xavier Fontdegloria

 

Economic activity in the U.S. fell to the lowest level on record in April amid strict lockdowns aimed to curb the spread of the coronavirus, data from the Federal Reserve Bank of Chicago showed Tuesday.

The Chicago Fed National Activity Index was minus 16.74 in April, down from a downwardly revised minus 4.97 reading in March. This is by far the lowest figure of the historical series, which started in 1967. An index value below minus 0.35 has been historically associated with periods of recession.

The CFNAI is composed of 85 economic indicators drawn from four broad categories of data: production and income; employment, unemployment, and hours; personal consumption and housing; and sales, orders, and inventories. A positive index reading corresponds to growth above trend and a negative index reading corresponds to growth below trend.

In April, all four broad categories of indicators used to construct the index made negative contributions, and all four categories decreased from March.

Seventy-nine of the 85 individual indicators made negative contributions to the CFNAI in April, while six made positive contributions. Sixteen indicators improved from March to April, while 69 indicators deteriorated, the Chicago Fed said.

The index's three-month moving average, the CFNAI-MA3, decreased to minus 7.22 in April from minus 1.69 in March. Following a period of economic expansion, an increasing likelihood of a recession has historically been associated with a CFNAI-MA3 value below minus 0.70 the Chicago Fed said.

Production-related indicators contributed minus 5.63 to the CFNAI in April, down from minus 2.31 in March. Industrial production declined 11.2% in April after decreasing 4.5% in March. The contribution of the sales, orders and inventories category to the CFNAI decreased to minus 1.24 in April from minus 0.81 in March.

Employment-related indicators contributed minus 9.06 to the CFNAI in April, down from minus 1.06 in March. Nonfarm payrolls fell by 20,537,000 in April after decreasing by 881,000 in March, and the unemployment rate increased to 14.7% in April from 4.4% in the previous month. The contribution of the personal consumption and housing category to the CFNAI ticked down to minus 0.81 in April from minus 0.80 in March.

 

Write to Xavier Fontdegloria at xavier.fontdegloria@wsj.com

 

(END) Dow Jones Newswires

May 26, 2020 09:06 ET (13:06 GMT)

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