US chemical activity index rises for fourth month

The Chemical Activity Barometer (CAB), a leading economic indicator created by the American Chemistry Council (ACC), was up 0.1% in April, as measured on a three-month moving average (3MMA), the group announced on Tuesday. 

Reaching an index of 98.1, last seen in January 2008, the CAB remains up 2.6% over a year ago, and suggests gains in business activity will continue into the fourth quarter.  

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 components were up in April. 

“All of the major production-related indicators are up and we might continue to see a strengthening. Construction-related chemistries have been adversely affected by bad weather so far this year, but we expect an improvement as we get further into spring,” said Kevin Swift, chief economist at the American Chemistry Council. 

“The data on plastic resins and polymers for packaging suggest that retail sales should continue to be strong as well,” Swift added.

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 US 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.

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, the ACC provides a barometer number, which reflects activity data for the current month, as well as a three-month moving average.