The Chemical Activity Barometer, the leading economic indicator created by the American Chemistry Council, rose 0.9% in October on a three-month moving average (3MMA) basis, a marked deceleration from the 1.5% gain in September and 2.6% gain in August.
On a year-over-year (Y/Y) basis, the barometer was down 3.3% in October. The unadjusted data show a 0.1% gain in October following a 0.8% gain in September and a 1.9% gain in August.
The diffusion index eased from 65% to 59% in October. It marks the number of positive contributors among the total number of indicators.
The CAB reading for September was revised downward by 0.26 points and the reading for August was revised downward by 0.30 points. “These were volatile months for the data,” the council explains. (AA, 10-15-20, P. 3)
“With six consecutive months of gains, the October CAB reading remains consistent with recovery in the U.S. economy,” observes Kevin Swift, chief economist at ACC.
Applying the CAB back to 1912, it provides a lead of two to 14 months, with an average lead of eight months at cycle peaks.
CAB’s four main components, each consisting of a variety of indicators are: production; equity prices; product prices; and inventories and other indicators.
In October, production-related indicators were mixed. Trends in construction-related resins, pigments and related performance chemistry were largely positive. Resins and chemistry used in light vehicles and other durable goods were up.
Gains in plastic resins used in packaging and consumer and institutional applications were mixed. Performance chemistry and exports were mixed. Equity prices rebounded, while product and input prices were positive.
In addition, inventory and other supply chain indicators were positive, according to the council.