US Chemical Activity Rises 3%

The American Chemistry Council’s (ACC) monthly Chemical Activity Barometer (CAB) continued to show a slowly expanding US economy, increasing 0.4% over February on a three month moving average (3MMA) basis. The year over year 3MMA showed a 2.9% gain over March 2012. CAB readings for November through February were each revised upwards by 0.1 points, bringing February’s year over year 3MMA to a 3.0% gain.


The CAB is a leading economic indicator derived from a composite index of chemical industry activity, according to ACC. Due to its early position in the supply chain, chemical industry activity leads that of the overall economy. February was the CAB’s seventh consecutive monthly gain.


“Positive gains in four broad areas: production indicators, equity prices, product prices and inventories, are encouraging signs for the health of the U.S. economy,” said Dr. Kevin Swift, chief economist at the American Chemistry Council. “We are beginning to see a slower year over year comparison, but overall the Chemical Activity Barometer continues to signal an expanding U.S. economy through 2013, with the possibility of accelerated growth in 2014 and beyond,” he added. “While rising activity continues in construction-related coatings, pigments, and plastic resins, supporting a continued recovery in the housing sector, we anticipate that recovery to begin a more slow progression,” said Swift. “Gains shown in equity and product prices are also key indicators for economic health.”


Chemistry is a $760 billion business and one of the country’s most significant manufacturing industries, with more than 96% of all manufactured goods touched by products of chemistry.


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 can help identify emerging trends in the wider U.S. economy within sectors closely linked to the business of chemistry such as housing, retail and automobiles. Applying the CAB back to 1919, 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.