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"' Chemical Activity Barometer (CAB) up nearly 3 percent year over year -
(March 26, 2013)
- The American Chemistry Council's (ACC) monthly
Chemical Activity Barometer (CAB)
released today continued to show a slowly expanding U.S. economy, increasing 0.4 percent over February on a three month moving average (3MMA) basis. The year over year 3MMA showed a 2.9 percent gain over March 2012. CAB readings for November through February were each revised upwards by 0.1 points, bringing February's year over year 3MMA to a 3.0 percent gain. The CAB is a leading economic indicator derived from a composite index of chemical industry activity. Due to its early position in the supply chain, chemical industry activity leads that of the overall economy. February was the CAB's seventh consecutive monthly gain.
"Positive gains in four broad areas: production indicators, equity prices, product prices and inventories, are encouraging signs for the health of the U.S. economy," said Dr. Kevin Swift, chief economist at the American Chemistry Council. "We are beginning to see a slower year over year comparison, but overall the Chemical Activity Barometer continues to signal an expanding U.S. economy through 2013, with the possibility of accelerated growth in 2014 and beyond" he added. "While rising activity continues in construction-related coatings, pigments, and plastic resins, supporting a continued recovery in the housing sector, we anticipate that recovery to begin a more slow progression," said Swift. "Gains shown in equity and product prices are also key indicators for economic health."
The business of chemistry is a $760 billion enterprise and one of America's most significant manufacturing industries, with more than ninety-six percent of all manufactured goods touched by products of chemistry.
The chemical industry's early position in the supply chain uniquely positions the CAB against other economic indicators. The CAB provides a long lead for business cycle peaks and troughs and can help identify emerging trends in the wider U.S. economy within sectors closely linked to the business of chemistry such as housing, retail and automobiles. Applying the CAB back to 1919, it has been shown to lead the National Bureau of Economic Research (NBER) cycle dates, by two to 14 months, with an average lead of eight months. NBER is the organization that provides the official start and end dates for recessions in the U.S.
Notes to Editors
The CAB was developed by the economics department at the American Chemistry Council. 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.
The CAB's three-month moving average (3MMA) increased 0.4 percent in March. The CAB has now increased for the last eight consecutive months, suggesting steady but slow growth prospects for 2013.
Growing activity was shown in all four of the CAB components.
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. 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 1919, it has been shown to provide a longer lead (or perform better) than the National Bureau of Economic Research, by two to 14 months, with an average lead of eight months. The median lead was also eight months. At business cycle troughs, the CAB leads by one to seven months, with an average lead of three months. The median lead was also three months. The CAB is rebased to the average lead (in months) of an average 100 in the base year (the year 2007 was used) of a reference time series. The latter is the Federal Reserve's Industrial Production Index.
The chemistry industry is one of the largest industries in the United States, generating $760 billion. The manufacturing sector is the largest consumer of chemical products, and 96 percent of manufactured goods are touched by chemistry.
The next CAB is currently planned for: April 23, 2013 | 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.