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U.S. Economic Expansion Being Tempered By Uncertainty In Energy Markets, Shows Leading Economic Indicator - KOAM TV 7

U.S. Economic Expansion Being Tempered By Uncertainty In Energy Markets, Shows Leading Economic Indicator

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SOURCE American Chemistry Council

- Chemical Activity Barometer retains strong year-over-year growth; shows short-term tightening -

WASHINGTON, July 22, 2014 /PRNewswire/ -- The Chemical Activity Barometer (CAB), a leading economic indicator created by the American Chemistry Council (ACC) posted a 0.4 percent increase over June, as measured on a three-month moving average (3MMA). The pace of growth was consistent with earlier growth logged in the second quarter. Year over year growth now stands at a 4.4 percent increase. Uncertainty in global energy markets kept the non-adjusted barometer at a slow 0.1 percent gain in June, but provisional data suggest there is room for further expansion in coming months. 

CAB vs. Industrial Production

The Chemical Activity Barometer has four primary components, each consisting of a variety of indicators: 1) production; 2) equity prices; 3) product prices; and 4) inventories and other indicators.

During July production-related indicators were up, as were product/selling prices, and inventories. After rebounding sharply in May, chemical equity prices have weakened in response to the growing unrest in the Middle East and Ukraine.

Unlike earlier readings, trends in construction-related chemistries suggest a lackluster market for this sector, which includes plastic resins as well as adhesives and sealants, construction chemicals, paint additives, and other performance chemistries. Pigments are faring better, as are plastic resins used in consumer product applications. Continued strength in electronic chemicals is encouraging, as the semiconductor industry's early place in the supply chain makes it a bellwether of the industrial cycle. Gains in oilfield chemicals suggest that the boom in unconventional oil and gas will continue to progress, contributing to the overall growth of the U.S. economy.

The Chemical Activity Barometer is a leading economic indicator derived from a composite index of chemical industry activity. 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. Month-to-month movements can be volatile so a three-month moving average of the barometer is provided. This provides a more consistent and illustrative picture of national economic trends.

Applying the CAB back to 1919, it has been shown to provide a longer lead (or perform better) than the National Bureau of Economic Research, by two to 14 months, with an average lead of eight months at cycle peaks. The median lead was also eight months. At business cycle troughs, the CAB leads by one to seven months, with an average lead of four months. The median lead was three months. The CAB is rebased to the average lead (in months) of an average 100 in the base year (the year 2007 was used) of a reference time series. The latter is the Federal Reserve's Industrial Production Index.

Chemical Activity Barometer for the Latest Six Months and Year-Ago Month*         



Jul-14

Feb-14

Mar-14

Apr-14

May-14

Jun-14

Jul-14










CAB


93.0

94.9

95.6

96.1

96.8

96.9

97.2

% M/M


0.1

0.3

0.7

0.5

0.7

0.1

0.4

% Y/Y


3.8

2.7

3.9

4.1

4.3

4.3

4.6










CAB (3 MMA)

92.9

94.6

95.1

95.6

96.2

96.6

97.0

% M/M


0.2

0.3

0.5

0.5

0.7

0.4

0.4

% Y/Y


4.0

2.6

3.0

3.6

4.1

4.2

4.4

*Percentage changes may not reflect index values due to rounding.

The CAB comprises indicators relating to the production of chlorine and other alkalies, pigments, plastic resins and other selected basic industrial chemicals; chemical company stock data; hours worked in chemicals; publicly sourced, chemical price information; end-use (or customer) industry sales-to-inventories; and several broader leading economic measures (building permits and new orders). Each month, ACC provides a barometer number, which reflects activity data for the current month, as well as a three-month moving average. The CAB was developed by the economics department at the American Chemistry Council.                       

The next CAB is currently planned for:
26 August 2014
9:00 a.m. Eastern Time

The CAB is designed and prepared in compliance with ACC's Antitrust Guidelines and FTC Safe Harbor Guidelines; does not use company-specific price information as input data; and data is aggregated such that company-specific and product-specific data cannot be determined.

Note: Every effort has been made in the preparation of this publication to provide the best available information. However, neither the American Chemistry Council, nor any of its employees, agents or other assigns makes any warranty, expressed or implied, or assumes any liability or responsibility for any use, or the results of such use, of any information or data disclosed in this material.

Photo - http://photos.prnewswire.com/prnh/20140721/129076

©2012 PR Newswire. All Rights Reserved.

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