gauge of trend activity, which bounced back slightly to -2.4 from -2.56. On the surface, this is relatively good news, but like all other relatively good news these days (i.e., better than consensus expectations), one must think before she talks (hat tip, Mark Thoma). In this case, the monthly drop to -3.26 is a better signal of the CNAI trend than is the 3-month bounce.
The 3-month gain is based entirely on the surge in October industrial production, which is a highly volatile series. The CNAI grew from -3.74 to -1.16 due to the re-emergence of industrial production following the Boeing strike and hurricanes. However, since then gravity has taken its toll.major components of the CNAI - labor, consumption, housing, sales, inventories - all turning down precipitously, the 3-mo. average CNAI is likely to fall with force in the first half of 2009.