The Chemical Activity Barometer (CAB), a leading economic indicator created by the American Chemistry Council (ACC; Washington, D.C.; www.americanchemistry.com), expanded 0.4 percent in July following a revised 0.7 percent increase in June, 0.8 percent increase in May and 0.6 percent increase in April. All data are measured on a three-month moving average (3MMA). Accounting for adjustments, the CAB remains up 2.6 percent over this time last year, an improvement over prior months. On an unadjusted basis the CAB jumped 0.6 percent in July, following a 0.2 percent gain in June.
“The CAB is signaling higher U.S. business activity into 2017 and that recent unpleasantness in the goods economy may be approaching its end,” stated ACC’s Chief Economist Kevin Swift.
In July, all four categories for the CAB improved for the fourth month in a row. Production-related indicators were positive, with trends in construction-related resins, pigments and related performance chemistry being mixed, and plastic resins used in packaging and other consumer and institutional applications largely showed improvement. Equity prices surged in July, joined by product prices gaining. Inventories and other downstream indicators were positive.
The Chemical Activity Barometer has four primary components, each consisting of a variety of indicators: 1) production; 2) equity prices; 3) product prices; and 4) inventories and other indicators.
The Chemical Activity Barometer is a leading economic indicator derived from a composite index of chemical industry activity. The chemical industry has been found to consistently lead the U.S. economy’s business cycle given its early position in the supply chain, and this barometer can be used to determine turning points and likely trends in the wider economy. Month-to-month movements can be volatile so a three-month moving average of the barometer is provided. This provides a more consistent and illustrative picture of national economic trends.