The August chemical activity barometer (CAB) showed a 0.4%
growth from July, reflecting gradual economic growth and
several positive trends, the American Chemistry Council (ACC)
said on Tuesday.
The CAB is a leading economic indicator derived from a
composite index of chemical industry activity, the trade group
This is the second consecutive monthly increase in the CAB, and
follows upward revisions for June and July. The upward trend
suggests slow economic growth for the remainder of the
The August CAB data indicates gradual economic growth,
similar to what we saw in July, driven primarily by improving
equity prices and positive trends in construction and light vehicle
related chemical production, said Dr. Kevin Swift, chief
economist at the ACC.
This uptick in growth follows three consecutive months
of decline and is comparable to patterns observed in 2010 and
2011. The CAB is back at its May 2012 level and is over one
percent higher than it was a year ago.
The 0.4% August increase in the CAB to 89.4 follows a
revised 0.2% gain in July. The index is now 1.1% ahead of
year-earlier figures. More detailed CAB figures can be found on
the ACCs news release.
The chemical industrys early position in the supply
chain uniquely positions the CAB against other economic
indicators, the ACC says.
The CAB provides a long lead for business cycle peaks and
troughs and can help identify emerging trends in the wider US
economy within sectors closely linked to the business of
chemistry such as housing, retail and automobiles.
Applying the CAB back to 1947, it has been shown to lead the
National Bureau of Economic Research (NBER), 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 US.
There were mixed trends in some areas of the August CAB
data, with the production of plastic resins used in consumer
and institutional applications remaining tepid, as they have
been in previous months.
The data also suggests a continued slowing of US exports,
the ACC said.
Among key indicators, company equities grew while production
and inventories remained flat, the group said. Prices continued