The Chemical Activity Barometer (CAB), an economic indicator created by the American Chemistry Council (ACC), rose 0.4% in May 2019 on a three-month moving average basis, the third monthly gain after several weak months. On a year-over-year basis, the barometer is up 0.5%.
The unadjusted measure of the CAB retreated 0.2% in May, with weakness centered in equity prices, and rose 0.7% in April. The diffusion index was steady at 65% in May. The diffusion index marks the number of positive contributors relative to the total number of indicators monitored. The CAB reading for April was revised upward by 0.27 points and that for March by 0.13 points.
“Year-earlier comparisons have turned positive in recent months, and while trade tensions, slowing economic growth overseas, and soft economic reports in the U.S. have created uncertainty that has weighed on business investment, the CAB signals gains in U.S. commercial and industrial activity through mid-2019, albeit at a moderate pace,” said Kevin Swift, chief economist at ACC. “There is some possibility of improving activity in the closing months of the year.”
The CAB has four main components, each consisting of a variety of indicators: production, equity prices, product prices, and inventories and other indicators. Production-related indicators in May were slightly positive. Trends in construction-related resins, pigments, and related performance chemistry were mixed and suggest further slow gains in housing activity. Plastic resins used in packaging were positive, while those for consumer and institutional applications were mixed. Performance chemistry and U.S. exports were mixed. Equity prices dropped sharply this month, while product and input prices rose. Inventory and other indicators were positive.
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