Chemical Activity Barometer Drops in September
The Chemical Activity Barometer (CAB), reportedly a leading economic indicator created by the American Chemistry Council (ACC), dropped 0.4% in September, following a revised 0.2% drop in August. The pattern shows a marked deceleration over second quarter activity. Accounting for adjustments, the CAB remains up 1.2% over this time last year. It is unlikely that growth will pick up through early 2016.
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
“Business activity cooled off in September,” said Kevin Swift, ACC chief economist. “Chemical, other equity, and product prices all continued to suffer, signaling a likely slowdown in broader economic activity. One bright spot continues to be plastic resins, particularly those used in light vehicles. Sales of light vehicles are on track to record a banner year, the best since 2000.”
Also at play is the ongoing decline in U.S. exports. According to Swift, global trade is lagging behind both global industrial production and broader economic activity with deflationary forces at play. With this month's data, the CAB is signaling slower gains in U.S. business activity into early 2016.
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