The first Chemical Activity Barometer (CAB) reading of 2014 strengthened slightly, pointing to continued growth and an improving US economy throughout 2014. The barometer in January ticked up to 94.0, increasing 0.2 points over December on a three-month moving average (3MMA) basis. This marks the ninth consecutive monthly gain for the CAB, which is now up 2.6 percent over a year ago. This growth is at a more moderate pace since the 0.4 percent gain last seen in September of 2013. The Chemical Activity Barometer is an established leading economic indicator, shown to lead U.S. business cycles by an average of eight months at cycle peaks, and four months at cycle troughs.
"Slow and steady isn't a bad thing when you consider the alternative," said Kevin Swift, chief economist at the American Chemistry Council. "This recovery seems to lag compare to previous post-recession recoveries, but overall the fundamentals remain strong, including the ongoing expansion in chemistries related to construction and consumer-related resins, as well as light vehicle sales," he added. Pointing to a particularly bright spot, Swift noted that there have been strong gains of late in electronic chemicals, food additives, foundry chemicals, lubricant and paint additives, mining chemicals, and printing ink.
Overall results in the four primary components of the CAB were mixed, with production and inventories up, product/selling prices flat, and a drop in equity prices.