posted on 26 November 2015
from the American Chemistry Council
The Chemical Activity Barometer (CAB) stabilized in November, rising 0.1 percent following three consecutive months of decline. October data was revised up 0.3 percent and September by 0.2 percent.
All data is measured on a three-month moving average (3MMA).The pattern reverses a downward trend that had begun to gain momentum. Accounting for adjustments, the CAB remains up 1.3 percent over this time last year, a deceleration of annual growth. In November 2014, the CAB logged a 3.4 percent annual gain over October 2013.
The unadjusted CAB reading for November was also up, rising 0.4 percent.
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.
During November chemical equity prices strengthened and led overall equity market performance. Product prices and inventories were relatively stable. U.S. exports continue to fall, influenced by a slowing global economy. Global trade continues to lag behind both global industrial production and broader economic activity.
Caveats on the Chemical Activity Barometer (CAB):
The definition of the CAB:
This index is a mixture of monetary / non-monetary elements with an analysis methodology which is not transparent - and does include some non-chemical industry elements such as the ISM manufacturing index and residential building permits. The composition and concept of the CAB according to the authors:
As this is a relatively new leading index, our biggest concern is backward revision (which degrades real time accuracy). Thankfully (providently?) backward revisions have been relatively small to date.
No single economic forecasting index has proven to have all the answers, as the reason the economy recesses is a combination of changing dynamics. Econintersect will continue to review this leading index and others as part of our monthly economic forecast.
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