posted on 27 September 2016
from the American Chemistry Council
The Chemical Activity Barometer (CAB) expanded 0.4 percent in September following a 0.4 percent gain in August and a 0.7 percent gain in July and June.
Accounting for adjustments, the CAB is up 3.7 percent over this time last year, an improvement over prior months. All data is measured on a three-month moving average (3MMA). On an unadjusted basis the CAB climbed 0.2 percent in September, following a 0.4 percent gain in August.
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 September, two of the four core categories for the CAB improved. Production-related indicators were positive, with building permits and housing starts, trends in construction-related resins, pigments and related performance chemistry strengthening and suggesting recovering housing activity. Equity prices declined in both absolute and relative terms. Product prices slipped in Septmber, with inventory and other downstream indicators slightly more positive.
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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