The Chemical Activity Barometer featured a slight decline of 0.1 percent this month, which is a deceleration from the 0.1 percent gain in September, as measured on a three-month moving average. Despite the slight decline in October, the CAB still signals further U.S. economic activity through second quarter 2015. Additionally, though the pace of growth has slowed, current gains have the CAB up a healthy 3.6 percent over this time last year, and the barometer remains near its post-recession high. The CAB is an economic indicator derived from a composite index of chemical industry activity.
“Geopolitical dynamics in the Middle East and Ukraine, Ebola and other recent events lead to higher uncertainty and uneasiness,” says Dr. Kevin Swift, chief economist at ACC. “This month’s decline, coupled with overall slowing of the pace of growth, suggest the U.S. economy is facing stronger headwinds. On the bright side, however, all indications still point to slow growth through the first half of 2015.”
The Chemical Activity Barometer has four primary components, each consisting of a variety of indicators: production, equity prices, product prices and inventories and other indicators. During October, the components were mixed, with production slightly improved, equity prices down, production soft and inventories further improved.
Production-related indicators improved very slightly in October. The recent housing report showed recovery, but recent trends in construction-related plastic resins, pigments and other performance chemistry suggest a housing market still yet to break through to higher levels. Chemical equities experienced a sharp drop this month, while product prices were slightly soft. New orders and inventories further improved during October but at a slower pace.
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