The American Chemistry Council (ACC) has released the sixth
monthly report of its Chemical Activity Barometer (CAB), an
economic indicator derived from a composite index of chemical
The November CAB showed a sharp, 0.5% drop over the previous
month. The abrupt decline follows four consecutive monthly
"The good news continues to be that we are witnessing
sustained, healthy activity in construction-related plastic resins,
coatings, pigments and other chemistry," said Dr. Kevin Swift,
chief economist at ACC. "It's possible that, with the elections
now behind us, the CAB is reflecting both the effects of
Superstorm Sandy, as well as the uncertainty in the real
economy as a result of the fiscal cliff and the resulting
sequestered budget cuts."
"The products of chemistry are the engine of our economy and go
into 96% of all manufactured goods. If you look at taking
approximately $100 billion out of the economy next year alone,
an early supply chain industry like the business of chemistry
starts to react very early," Mr. Swift added.
The chief economist noted that month-to-month movements can
be volatile, so a three-month moving average is provided. This
gives a more consistent and illustrative picture of national
"If we look at the three-month moving average, we've got
four months of growth, suggesting slow and tentative economic
growth into 2013," Mr. Swift said.
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 it 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) 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 US.