The Chemical Activity Barometer (CAB), a leading economic indicator created by the American Chemistry Council (ACC; Washington, D.C.; www.americanchemistry.com), marked the second quarter by posting a robust 5.6 percent year-over-year gain, suggesting continued growth through year-end 2017.
The barometer posted a 0.4 percent gain in April, following three successive months of upward revisions to the monthly data. All data is measured on a three-month moving average (3MMA). On an unadjusted basis the CAB climbed 0.2 percent in April.
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.
In April, production-related indicators were positive, with U.S. exports and housing permits improving. Equity prices retreated as uncertainty over tax reform and other public policy issues gained footing. Inventory and product prices all remained positive. Overall the barometer suggests accelerating gains in U.S. business activity through the end of the year.
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 U.S. economy’s 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 trends.