U.S. Economic Activity Plunges in April to Lowest Level on Record -- Chicago Fed
26 May 2020 - 11:21PM
Dow Jones News
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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