Chemical Activity Barometer Reaches Six-Year Peak

May 28, 2014
Economic indicator shows solid rebound.

The Chemical Activity Barometer (CAB), an economic indicator created by the American Chemistry Council (ACC), reached its highest peak since February 2008, while also posting its highest year-over-year gain since September 2010. Measured on a three-month moving average (3MMA), the CAB realized a 0.8 percent gain over April, and is up 4.1 percent over this time last year. The data reflect upward revisions for the previous five months, suggesting more than just a rebound from the adverse winter months.

Though housing starts improved last month and sales of existing and new homes were up, activity within the construction-related plastic resins segment was mixed. In contrast, activity within the pigments and other performance chemistry markets, such as adhesives, sealants, and paint additives was stronger. Likewise, upward performance within the electronics chemicals sector was encouraging as the semiconductor industry is a bellwether of the industrial cycle. Gains in oilfield chemicals suggest that the boom in unconventional oil and gas continues to progress, enhancing overall economic growth.

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. Overall results in the four primary components of the CAB were positive, with chemical equity prices continuing to outpace the broader market.

The Chemical Activity Barometer is 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.

For more information, visit: www.americanchemistry.com

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