Chemical Activity Barometer Shows Slight Decline

By Chemical Processing Staff

Feb 26, 2015

The Chemical Activity Barometer (CAB), an economic indicator created by the American Chemistry Council (ACC), dipped 0.2% this month following a 0.3% gain in January, as measured on a three-month moving average (3MMA). Accounting for adjustments, the CAB remains up 3.2% over this time last year.

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. During February, the components were mixed, with production and equity prices up, product prices down, and inventories continuing to improve.

"Heavy snows in New England and severe cold weather across much of the nation are affecting growth prospects this quarter," says Dr. Kevin Swift, chief economist at ACC. "However, chemical equity prices still surged in February and have outperformed the overall stock market, which is always a good sign.”

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.

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