Chemical Activity Barometer shows positive gain in August

Written on: August 31, 2020 by SprayTM

The Chemical Activity Barometer (CAB), a leading economic indicator created by the American Chemistry Council (ACC), rose by 2.5% in August on a three-month moving average basis following a 3.0% gain in July. On a year-over-year basis, the barometer was down 6.1% in August.

The unadjusted data show a 1.8% gain in August following a 1.5% gain in July and a 4.1% gain in June. The diffusion index rose from 41% to 59% in August, the first time since January that it has been above 50%, ACC said. The diffusion index marks the number of positive contributors relative to the total number of indicators monitored. The CAB reading for July was revised upward by 1.08 points and that for June was revised upward by 0.77 points.

“With four consecutive months of gains, the latest CAB reading is consistent with recovery in the U.S. economy, which is likely to be slow,” said Kevin Swift, Chief Economist at ACC. “The August reading is only 5.8% below its pre-coronavirus level, and the indicator appears to be improving at a fairly good pace.”

The CAB has four main components, each consisting of a variety of indicators: production; equity prices; product prices; and inventories and other indicators.

In August, production-related indicators were mixed. Trends in construction-related resins, pigments and related performance chemistry were mostly positive, and this sector has been strong. Resins and chemistry used in other durable goods were positive. Plastic resins used in packaging and for consumer and institutional applications showed strong gains. Performance chemistry improved, while U.S. exports were mixed. Equity prices gained and product and input prices strengthened. Inventory and other supply chain indicators were positive.

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