The Chemical Activity Barometer (CAB), a leading economic
indicator created by the American Chemistry Council (ACC),
continued its upward growth in June, with a 0.5% gain from
Measured on a three-month moving average (3MMA), the
CABs 0.5% gain beat the average first quarter monthly
gains of 0.3%, according to new figures released Tuesday by
Though the pace of growth has slowed significantly, gains in
June have brought the CAB up a solid 4.3% over this time last
Overall, we are seeing signs of continued growth in the
USeconomy, and trends in construction
show a market which has not yet reached its full
potential, said Dr. Kevin Swift, chief economist at the
ACC. However, unrest in Iraq is already affecting
chemical equity prices, and the potential for an energy price
shock is worrying, he added.
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. During June, the components were mixed,
with production flat, equity prices down, and product prices
and inventories up.
Though the production indicator was flat in June, plastic
resins used in consumer and institutional applications were
stronger, volumes of performance chemistry used in industry
were better, and US exports are growing. Continued strength
in electronic chemicals is encouraging, as the semiconductor
industrys early place in the supply chain makes it a
bellwether of the industrial cycle.
Gains in oilfield chemicals suggest that the boom in
unconventional oil and gas will continue to progress,
contributing to the overall growth of the US economy.
Additionally, of the 28 specialty chemical sectors monitored,
most are expanding, with particular strength shown in nearly
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 economys 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
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 at cycle peaks.