Chemical Activity Barometer Unchanged for July

WASHINGTON, DC -- July 24 -- The American Chemistry Council (ACC) today released the second monthly report of its Chemical Activity Barometer (CAB), a new leading macroeconomic indicator. The July CAB was flat after declining three consecutive months, historically a sign of slowing economic activity.

“July data continues to suggest that broader U.S. economic growth in the second half of 2012 will be weak, while the CAB also suggests a slowing of U.S. exports during the rest of the year,” said Dr. Kevin Swift, chief economist at ACC. “Looking at the data, one bright spot for the economy is the positive trends in the light vehicles and housing sectors which could possibly suggest a forward momentum building in these sectors.”

The chemical industry’s early position in the supply chain uniquely positions the CAB against other economic indicators. The CAB provides a long lead for business cycle peaks and troughs and can help identify emerging trends in the wider U.S. economy within sectors closely linked to the business of chemistry such as housing, retail, and automobiles. Applying the CAB back to 1947, it has been shown to provide a longer lead (or perform better) than the National Bureau of Economic Research (NBER), by two to 14 months, with an average lead of eight months. NBER is the organization that provides the official start and end dates for recessions in the United States.

The preliminary July data from the CAB remained steady at 88.5 from previous the month. This follows three consecutive months of decline.

Data showed production-related chemistry indicators were mixed at best. In addition, trends in plastic resins used in consumer and institutional applications have softened and overall trends suggest slowing U.S. exports.

This is the second monthly report of the Chemical Activity Barometer. It was developed by the economics department at ACC. The chemical industry has been found to consistently lead the U.S. economy’s business cycle given its early position in the supply chain, and this barometer can be used to determine turning points and likely trends in the wider economy.

The CAB’s three-month moving average (3 MMA) declined in July, suggesting muted growth prospects in the months ahead.

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