The Chemical Activity Barometer (CAB), an economic indicator created by the American Chemistry Council (ACC), expands 0.5% in February on a three-month moving average (3MMA) basis, its fifth such solid gain following the 2017 hurricanes. On an unadjusted basis, growth was just 0.1%. The CAB is up 4.2% on a 3MMA compared to a year earlier.
"All eyes have been on inflation, starting with a strong gain in January wages reported two weeks and continuing into last week with a larger than expected gain in consumer-level inflation," says Kevin Swift, chief economist at ACC. "Equity markets have suffered, but with some good reports recently on the real economy, along with people calming down, equity markets now seem to be on the mend."
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.
February production-related indicators show continued improvement, including gains in construction-related resins and pigments; plastic resins used for consumer packaging; performance chemistries; and U.S. exports. While equity prices recede, inventory and other indicators are very positive. Overall, the diffusion index contracts to 53%. This index marks the number of positive contributors relative to the total number of indicators monitored.
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