US chemical index shows signs of slowdown: ACC

The Chemical Activity Barometer (CAB), a leading economic indicator created by the American Chemistry Council (ACC), ticked up slightly in January, rising 0.1% following a downward adjustment of 0.1% in December, the trade group said on Tuesday.

All data is measured on a three-month moving average (3MMA). Accounting for adjustments, the CAB remains up 1.6% over this time last year, a marked deceleration of activity from one year ago when the barometer logged a 3.2% year-over-year gain from 2014. 

On an unadjusted basis, the CAB fell 0.1% and 0.2% in December and January, respectively, raising concerns about the pace of future business activity through the second quarter of 2016.

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.

In January, as reflected by markets around the world, equity prices were hard hit. Flat inventories and production also added a drag to the barometer.

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, the ACC says.

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.