U.S. economic activity slipped slightly below its historical trend in August as weaker production pulled down the Chicago Fed’s broad measure of the economy, even as employment and consumer-related indicators improved.
The Chicago Fed National Activity Index, or CFNAI, fell to -0.04 in August from a revised +0.08 in July, according to the latest Chicago Fed National Activity Index data. The 0.12-point monthly decline, an Investozora calculation based on those two readings, pushed the index back below zero.
A zero CFNAI reading is associated with the U.S. economy growing at its historical trend rate. Negative readings indicate below-average growth, while positive readings point to above-average growth. The index combines 85 economic indicators covering production and income, employment, consumption and housing, and sales, orders and inventories.
Production was the main source of weakness. Production-related indicators contributed -0.07 point in August, compared with roughly a neutral contribution in July. That deterioration is consistent with separate Federal Reserve data showing that industrial production was unchanged in August after rising 0.2% in July, while manufacturing output fell 0.3%.
The Federal Reserve’s September 18 Industrial Production and Capacity Utilization release also showed mining output edging up 0.1% and utilities production increasing 1.8%. That manufacturing weakness also connects with Investozora’s earlier report on August U.S. industrial production and the decline in manufacturing output. The other CFNAI categories were more mixed.
- Production and income: -0.07 in August, down from about 0.00 in July.
- Sales, orders and inventories: 0.00, down from +0.15.
- Employment, unemployment and hours: +0.01, improving from -0.01.
- Personal consumption and housing: +0.01, improving from -0.06.
Those figures show that the monthly decline was not broad-based across every major part of the index. Production weakened and the boost from sales, orders and inventories disappeared, but employment and consumption-and-housing indicators moved in the opposite direction.
The improvement in employment is especially notable because it partially offset the production drag rather than reinforcing it. That makes August different from a reading in which several major categories deteriorate together.
Recent regional manufacturing data have also been uneven. Investozora previously reported that the Philadelphia Fed manufacturing index remained positive while price pressures increased, another reminder that factory-sector indicators can diverge across regions and measures.
The broader CFNAI trend was steadier than the monthly headline suggests. The three-month moving average, CFNAI-MA3, rose to +0.01 in August from -0.01 in July. Because monthly CFNAI readings can be volatile, the Chicago Fed uses the moving average to provide a more stable view of underlying economic activity.
That distinction matters. August’s -0.04 monthly reading shows activity running slightly below its historical trend during the month, but the three-month average sitting near zero does not by itself signal a sharp economic contraction. The CFNAI also should not be treated as a recession call from a single month.
The Chicago Fed notes that, following an economic expansion, an increasing historical likelihood of recession has been associated with a CFNAI-MA3 below -0.70. August’s +0.01 reading remained far above that historical threshold. The next CFNAI release is scheduled for October 26, 2026, when the index will incorporate September economic data and revisions to earlier readings.
