CAB Points to Stable US Chemicals Demand

Index Posts No Change for November

Economic analysis of the U.S. chemicals sector suggests that activity was flat in November, according to the American Chemistry Council.
The ACC created the Chemical Activity Barometer, or CAB, as an index of economic activity, and it recorded no change in November on a three-month moving average basis following a 0.3 percent decline in October.
“The CAB signals slow gains in U.S. commerce into mid-year 2020,” said Kevin Swift, chief economist at ACC.
The barometer fell 0.2 percent for a year-on-year basis.

Slow Gains in Housing

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

“Trends in construction-related resins, pigments and related performance chemistry were slightly positive and suggest slow gains in housing activity. Plastic resins used in packaging and for consumer and institutional applications were mixed, despite strong consumer spending reflecting elevated confidence and solid job and income gains. Performance chemistry eased and U.S. exports were weak,” the report’s authors noted.

Flat output was coupled with a sharp rise in equity prices this month, as product and input prices gained as well.

Broader Economic Trends
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 ACC.
“Due to its early position in the supply chain, chemical industry activity has been found to consistently lead the U.S. economy’s business cycle, and this barometer can be used to determine turning points and likely trends in the broader economy,” Swift said.
Headquartered in Washington D.C., ACC is an independent industry association represents a diverse set of companies engaged in the business of chemistry using best-in-class member engagement, political advocacy, communications and scientific research.