US economic growth lost momentum in June, Chicago Fed says

U.S. economic growth faltered slightly in June compared with the previous month, according to new data released Thursday by the Federal Reserve Bank of Chicago. 

The Chicago Fed National Activity Index, which measures overall economic activity and related inflationary pressure, fell to 0.09 in June from 0.26 in May. The index is comprised 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. 

In June, 40 of the 85 individual indicators deteriorated from May, while 45 made positive contributions to the index last month, the Chicago Fed said in a news release.

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The contribution of the employment, unemployment and hours category to the index dropped to 0.09 in June from 0.15 in May. Although employment rose by 850,000 jobs in June, the jobless rate ticked up to 5.9% last month, partially offsetting the gains in the labor market. 

Production-related indicators, meanwhile, contributed just 0.01 to the index last month – a sharp decrease from the 0.26 it added in May. Industrial output climbed 0.4% in June, but manufacturing production shrank 0.1%. The contribution of the sales, orders and investors category to the index increase 0.06 in June. 

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The data comes as a nationwide surge in the delta variant of COVID-19 rattles investors, who are worried that rising infections could bring about new lockdown measures and a drawn-out economic recovery.

The highly transmissible variant triggered a broad market sell-off on Monday, with the Dow Jones Industrial Average tumbling more than 700 points for its worst drop since October.

Although the U.S. was making solid progress with vaccinations – 68.6% of adults have received at least one shot – and infections began falling, cases have rebounded recently as the delta variant spreads among the unvaccinated population.

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The U.S. is averaging about 30,000 new daily cases in the last seven days, compared to the 11,000 seven-day average in June, according to the Centers for Disease Control and Prevention.

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