The Chemical Activity Barometer (CAB), a leading economic indicator created by the American Chemistry Council (ACC), fell 0.1% in August on a three-month moving average (3MMA) basis following a similar drop in July and four months of gains. On a year-over-year (Y/Y) basis, the barometer was flat at 0.0 percent (3MMA).
The unadjusted measure of the CAB fell 0.5% in August after a 0.1% gain in July. The diffusion index was 59% in August. 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 0.58 points and that for June by 0.62 points.
“A pattern of fluctuating CAB readings—months up followed by months down—indicates late-cycle activity,” said Kevin Swift, chief economist at ACC. “The barometer signals gains in U.S. commerce into early 2020, but at a slow pace, while rising volatility suggests change may be coming.”
The CAB has four main components, each consisting of a variety of indicators: 1) production; 2) equity prices; 3) product prices; and 4) inventories and other indicators.
Production-related indicators in August were slightly positive. Trends in construction-related resins, pigments and related performance chemistry were slightly positive and suggest slow gains in housing activity. Plastic resins used in packaging and for consumer and institutional applications were also slightly positive. Performance chemistry was soft and U.S. exports were mixed. Equity prices dropped this month, as did product and input prices. Inventory and other indicators were positive.
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