The Chemical Activity Barometer (CAB), a leading economic indicator created by the American Chemistry Council (ACC), rose 1.2% in May on a three-month moving average (3MMA) basis following a 1.0% increase in April. On a year-over-year (Y/Y) basis, the barometer rose 18.6% in May (3MMA).
The unadjusted data show a 1.0% increase in May following a 0.9% gain in April. The diffusion index reached 100% in May. The diffusion index marks the number of positive contributors relative to the total number of indicators monitored. The CAB reading for April was revised upward by 0.91 points and the reading for March was revised upward by 0.16 points. The May data are provisional and subject to revision.
"The latest CAB reading is consistent with marked expansion of commerce, trade and industry," says Kevin Swift, chief economist at ACC.
In May, production-related indicators were positive. Despite some recent weakness in housing – a reflection of higher interest rates and prices as well as labor and supply-side constraints – trends in construction-related resins and related performance chemistry were solid. Aided by strength in automotive markets, resins and chemistry used in other durable goods were strong. Gains in plastic resins used in packaging and for consumer and institutional applications were positive. Performance chemistry for industry was largely positive. Exports were positive, while equity prices gained, reaching new records. Product and input prices were positive, as were inventory and other supply chain indicators.
The CAB is derived from a composite index of chemical industry activity. 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 the barometer can be used to determine turning points and likely trends in the broader economy. Month-to-month movements can be volatile, so a three-month moving average of the CAB reading is provided. This provides a more consistent and illustrative picture of national economic trends.
For more information, visit: www.americanchemistry.com
