The Chemical Activity Barometer (CAB), an economic indicator created by the American Chemistry Council (ACC), fell 5.4% in May on a three-month moving average (3MMA) basis following a 5.4% decline in April. On a year-over-year (Y/Y) basis, the barometer fell 12.4% in May.
The unadjusted May data shows a 0.3% decline following a 6.3% drop in April and an 8.9% decline in March. The diffusion index fell from 35% to 29% in May as production declines became more widespread. The diffusion index marks the number of positive contributors relative to the total number of indicators monitored. The April CAB reading was revised upward by 0.37 points and the March reading was revised downward by 0.08 points.
“The May CAB reading is consistent with a recession, but given the small unadjusted decline of only 0.3%, one that may bottom out,” says Kevin Swift, chief economist at ACC.
Production-related indicators declined in May. Trends in construction-related resins, pigments and related performance chemistry were negative, as were resins used in appliances, light vehicles, machinery and other durable goods. Plastic resins used in packaging and for consumer and institutional applications were mixed. Performance chemistry was negative and U.S. exports were weak. Equity prices are improving and product and input prices are firming. Inventory and other supply chain indicators were negative.
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