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Chemical Activity Barometer Continues To Signal Gains In U.S. Commercial And Industrial Activity

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Chemical Activity Barometer Continues To Signal Gains In U.S. Commercial And Industrial Activity

PR Newswire

WASHINGTON, July 24, 2018 /PRNewswire/ -- The Chemical Activity Barometer (CAB), a leading economic indicator created by the American Chemistry Council (ACC), rose 0.1 percent in July on a three-month moving average (3MMA) basis, improving upon June and May performances which were essentially flat. The barometer is up 3.9 percent year-over-year (Y/Y/), a slower pace than of that earlier in the year. The unadjusted CAB also increased, notching a 0.2 percent gain, up from a 0.1 percent gain in June. July readings indicate a continued expansion of U.S. commercial and industrial activity well into the first quarter 2019.

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.

All four broad categories remained strong. Production-related indicators in July were mixed as trends in construction-related pigments and related performance chemistry were slightly positive and suggested further gains in housing activity. Reflecting a strong retail and food services sector, plastic resins used in packaging and in many other consumer and institutional applications were mixed and suggest further but modest gains in retail sales. U.S. exports also continued to rise as did equity prices; product and input prices; and inventories.

The diffusion index slipped from 82 percent to 71 percent and the annualized six month growth rate slowed. This index marks the number of positive contributors relative to the total number of indicators monitored. 

The Chemical Activity Barometer is a leading economic indicator 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.

Applying the CAB back to 1912, it has been shown to provide a lead of two to fourteen months, with an average lead of eight months at cycle peaks as determined by the National Bureau of Economic Research. The median lead was also eight months. At business cycle troughs, the CAB leads by one to seven months, with an average lead of four months. The median lead was three months. The CAB is rebased to the average lead (in months) of an average 100 in the base year (the year 2012 was used) of a reference time series. The latter is the Federal Reserve's Industrial Production Index.

Chemical Activity Barometer for the Latest Six Months and Year-Ago Month*



Jul-17

Feb-18

Mar-18

Apr-18

May-18

Jun-18

Jul-18









CAB (3 MMA)

117.57

121.31

121.85

121.97

122.02

122.06

122.14

% M/M

0.1

0.6

0.4

0.1

0.0

0.0

0.1

% Y/Y

3.6

4.4

4.4

4.1

4.0

3.9

3.9









CAB

117.78

121.82

121.99

122.11

121.97

122.11

122.33

% M/M

0.3

0.1

0.1

0.1

-0.1

0.1

0.2

% Y/Y

3.3

4.3

4.0

4.1

3.8

4.0

3.9


*Percentage changes may not reflect index values due to rounding.

The CAB comprises indicators relating to the production of chlorine and other alkalies, pigments, plastic resins and other selected basic industrial chemicals; chemical company stock data; hours worked in chemicals; publicly sourced, chemical price information; end-use (or customer) industry sales-to-inventories; and several broader leading economic measures (building permits and new orders). Each month, ACC provides a barometer number, which reflects activity data for the current month, as well as a three-month moving average. The CAB was developed by the economics department at the American Chemistry Council.

The next CAB is currently planned for:
21 August 2018
9:00 a.m. Eastern Time

 

The CAB is designed and prepared in compliance with ACC's Antitrust Guidelines and FTC Safe Harbor Guidelines; does not use company-specific price information as input data; and data is aggregated such that company-specific and product-specific data cannot be determined.

Note: Every effort has been made in the preparation of this publication to provide the best available information. However, neither the American Chemistry Council, nor any of its employees, agents or other assigns makes any warranty, expressed or implied, or assumes any liability or responsibility for any use, or the results of such use, of any information or data disclosed in this material.

www.americanchemistry.com

 

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SOURCE American Chemistry Council

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