US chemical group sees flat July, dull growth ahead

The July chemical activity barometer (CAB) index was flat after declining three consecutive months, historically a sign of slowing economic activity, the American Chemistry Council (ACC) said on Friday.

“July data continues to suggest that broader US economic growth in the second half of 2012 will be weak, while the CAB also suggests a slowing of US exports during the rest of the year,” said Dr. Kevin Swift, chief economist at ACC.

“Looking at the data, one bright spot for the economy is the positive trends in the light vehicles and housing sectors which could possibly suggest a forward momentum building in these sectors.”

The chemical industry’s 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 provide a longer lead (or perform better) than 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.

The preliminary July data from the CAB remained steady at 88.5 from previous the month. This follows three consecutive months of decline.

Data showed production-related chemistry indicators were mixed at best. In addition, trends in plastic resins used in consumer and institutional applications have softened and overall trends suggest slowing US exports.

For further details, read the ACC’s official news release by clicking here.

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