ACC Index Suggest Growing Chemicals Demand

(Americas) CAB Increases 0.6 percent

A positive start to the year for the U.S. chemicals industry suggests that activity in in U.S. sector is strengthening, according to the American Chemistry Council.

The Chemical Activity Barometer, or CAB, index created by the ACC, jumped 0.6 percent in January on a three-month moving average basis. This follows a 0.1 percent gain in December.

“The CAB signals gains in U.S. commerce into the third quarter of 2020,” said Kevin Swift, chief economist at ACC.

The barometer rose 1.4 percent on a year-on-year basis, following an upward revision of the December CAB by 0.33 points and for November downward by 0.22 points.

Key Signal

Based on four main components of production – equity prices, product prices, inventories and other indicators, the CAB index is a key signal for breakbulk demand in the industry and illustrative of key industry movements.

“The unadjusted January data showed a 1.0 percent gain following a 0.5 percent increase in December and a 0.4 percent gain in November,” a spokesperson for the ACC said.

Indicators covered by the tool include: production of chlorine and other alkalies, pigments, plastic resins and other selected basic industrial chemicals; chemical company stock data; hours worked in chemicals; publicly-sourced chemical price information; industry sales-to-inventories; and several broader leading economic measures.

Diffusion Index Hits 62 percent

The ACC’s diffusion index also rose in January, increasing to 62 percent. This reading marks the number of positive contributors relative to the total number of indicators monitored.

Analysis of the CAB as a forecasting tool suggests that it provides a lead of two to 14 months, with an average lead of eight months at cycle peaks as determined by the National Bureau of Economic Research, according to the ACC.