Chemical Activity Barometer Posts Strongest Gain In Seven Years

March 22, 2017
Consumer and business confidence reach levels not seen in decades; optimism is reflected in increased chemical industry activity.

The Chemical Activity Barometer (CAB), a leading economic indicator created by the American Chemistry Council (ACC), posts its strongest year-over-year gain in nearly seven years. The 5.5% increase over this time last year reflects elevated consumer and business confidence and an overall rising optimism in the U.S. economy, according to ACC. Speaking last week, Federal Reserve Chairwoman Janet Yellen reportedly also referenced a "confidence in the robustness of the economy" as a reason to move forward with an interest rate hike. 

The barometer posted a 0.5% gain in March following a 0.5% gain in February and 0.4% gain in January. All data is measured on a three-month moving average (3MMA). Coupled with consecutive monthly gains in the fourth quarter of 2016, the pattern shows consistent, accelerating activity, according to ACC. On an unadjusted basis, the CAB climbed 0.4% in March, following a 0.4% gain in February and a 0.6% increase in January. 

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 March, production-related indicators were positive with U.S. exports improving, according to ACC. Equity prices and inventory indicators were also positive while product prices reportedly remained stable. Overall, according to ACC, the barometer suggests accelerating gains in U.S. business activity through the fourth quarter.

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