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Chemical Activity Barometer Shows Economy Improving

Volume 2, Issue 13
July 15th, 2014
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Crane-With-Tank-2-copyThe American Chemistry Council announced that its Chemical Activity Barometer showed continuing upward growth in June, with a 0.5% gain from May.

Measured on a three-month moving average, the CAB’s 0.5% gain beat the average first quarter monthly gains of 0.3%. Although the pace of growth has slowed significantly, ACC said the gains in June brought the CAB up a solid 4.3% over this time last year.

“Overall, we are seeing signs of continued growth in the U.S. economy, and trends in construction-related chemistry show a market which has not yet reached its full potential,” said ACC Chief Economist Dr. Kevin Swift.

Increasing Middle East turmoil will exert price pressure in the future. “However, unrest in Iraq is already affecting chemical equity prices, and the potential for an energy price shock is worrying,” he said in late June before Israel’s situation worsened.

The CAB has four primary components: production, equity prices and product prices, along with inventories and other indicators. During June, they were mixed, with production flat, equity prices down, and product prices and inventories up.

Although the production indicator was flat in June, the council pointed out that plastic resins used in consumer and institutional applications were stronger, volumes of performance chemistry used in industry were better, and U.S. exports are growing.

ACC said continued strength in electronic chemicals is encouraging because 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, ACC said, contributing to the overall growth of the economy. In addition, of the 28 specialty chemical sectors monitored, most are expanding, with particular strength shown in nearly half, the council noted.

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