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Comment Business & Economics

Leading economic indicator CAB expands for December, ACC says

By Scott Jenkins |

The Chemical Activity Barometer, a leading economic indicator created by the American Chemistry Council (ACC; Washington, D.C.; www.americanchemistry.com), expanded 0.6 percent in December on a three-month moving average (3MMA) basis and 0.4 percent on an unadjusted basis. The CAB is up 3.7 percent compared to a year earlier. Barometer readings were revised upwards for November (0.22), October (0.39) and September (0.08) as 2017 closes on a solid note, suggesting further business activity gains through the third quarter of 2018.

 According to the ACC, 2017 is closing with strong commercial and industrial activity, suggesting healthy business growth through the third quarter of 2018.

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.

In December, production and inventories were up, while equity and product prices declined. December’s diffusion index contracted to 59 percent. The diffusion index is the number of positive contributors relative to the total number of indicators monitored. 

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.

Trends in construction-related resins, pigments, and related performance chemistries were positive and suggest further progress in housing activity. U.S. exports also rose again.

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