The Chemical Activity Barometer (CAB) recently posted a 0.3% decline in January on a three-month moving average (3MMA) basis. This reportedly marks the barometer’s third consecutive month-over-month drop and suggests a slower rate of U.S. economic growth. On a year-over-year (Y/Y) basis, the barometer is up 0.8% (3MMA), a pronounced slowdown in the pace of growth as compared with late last year.

The unadjusted measure of the CAB was flat (0%) in January and declined 0.2% in December 2018 and 0.8% in November 2018.

Major components of the barometer were mixed in January. Trends in construction-related resins, pigments and related performance chemistry were mixed, suggesting slow housing activity. Plastic resins used in packaging and in consumer and institutional applications turned positive, performance chemistry gained, and U.S. exports were mixed. Equity prices retreated sharply again this month, and product and input prices fell as well. Inventory indicators were positive.

“The CAB continues to signal gains in U.S. commercial and industrial activity through mid-2019, but at a much slower pace as growth (as measured by year-earlier comparisons) has turned over,” said Kevin Swift, chief economist. “Despite three straight months of decline in the barometer, the cumulative decline is 1%, well below the 3% that would signal negative growth in the U.S. economy.”

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