The Chicago Fed National Activity Index came in at -0.96 in May, up from the April reading of -1.23, which was downwardly revised from -1.17. Despite the overall improvement, all four broad categories were negative in the month, though inflationary expectations over the coming year are said to be low.

The three-month moving average advanced to -1.08 from the previous report's reading of -1.27, but the negative figure indicates that economic activity is below its historical trend. The report said a three-month average worse than -0.70 indicates an increased likelihood that a recession has begun, and May marks the sixth month in a row that this has been the case.

The improvement in the index came largely from production indicators, which came in at -0.19 in May, an improvement from April's -0.64 reading.

The employment indicator index came in at -0.45, down from the -0.25 reading in April. This largely confirms the nonfarm payrolls data for May released earlier in the month, which showed a decline of 49K jobs, a larger decrease than April's 28K decline.

Consumption and housing indicators hit a negative note in May, coming in at -0.25, up from the April reading of -0.28.

The sales, orders, and inventories category contributed a -0.08 reading in May.

Of the total 85 economic indicators that make up the Chicago Fed National Activity Index, 63 made negative contributions, while only 22 had positive results.

The index was constructed using data available as of June 19, 2008.

By Patrick McGee and edited by Stephen Huebl