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Leading Economic Indicator Predicts Fourth Quarter to End Strong

October 29, 2013
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The partial shutdown of the federal government earlier this month reportedly didn’t take the steam out of the U.S. economy, according to the American Chemistry Council’s (ACC) monthly Chemical Activity Barometer (CAB). The CAB, a leading economic indicator, has been shown to lead U.S. business cycles by an average of eight months at cycle peaks, and four months at cycle troughs. The barometer increased 0.3% over September on a three-month moving average (3MMA) basis, and remains up 3.1% over a year ago. It continues to be at its highest point since June 2008. Prior CAB readings for July through September were slightly revised.

“Despite the uncertainty being fueled by political gridlock in Washington, the fundamentals of our economy appear to be healthy,” said Kevin Swift, Ph.D., chief economist for the ACC. “This month’s Chemical Activity Barometer is up 0.3%, and this follows upticks in August and September as well.”

Though some recent reports have hinted at a slowing of consumer spending, these are likely related to news coming out of Washington, according to Swift. “Production of plastic resins used in consumer applications appears actually to be strengthening, suggesting further gains driven by consumers. This bodes well for retailers as the important holiday shopping season approaches,” he said.

Other notable benchmarks within the barometer also reportedly held strong. Chemical equities continued to outpace the overall market, as measured by the S&P 500, and inventories and new orders expanded, likely restored by a return of business confidence following the end of the government shutdown.

For more information, visit www.americanchemistry.com.

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