Chemical Activity Barometer Increased in June
Note: This appears to be a leading indicator for industrial production.
From the American Chemistry Council: Chemical Activity Barometer Continues Upward Climb Into Third Quarter
The Chemical Activity Barometer (CAB), a leading economic indicator created by the American Chemistry Council (ACC), rose 0.1 percent on a three-month moving average (3MMA) basis in June to 122.27. This marked the barometer’s tenth consecutive gain, following revisions. The barometer is up 4.1 percent on a 3MMA compared to a year earlier. The unadjusted CAB also increased, notching a 0.3 percent gain, pushing it to a 4.3 percent gain year-over-year. The March, April, and May readings were all adjusted upward. June readings indicate a continued expansion of U.S. commercial and industrial activity into early 2019.
Applying the CAB back to 1912, it has been shown to provide a lead of two to fourteen months, with an average lead of eight months at cycle peaks as determined by the National Bureau of Economic Research. 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 2012 was used) of a reference time series. The latter is the Federal Reserve’s Industrial Production Index.
Click on graph for larger image.
This graph shows the year-over-year change in the 3-month moving average for the Chemical Activity Barometer compared to Industrial Production. It does appear that CAB (red) generally leads Industrial Production (blue).
The year-over-year increase in the CAB has been solid over the last year, suggesting further gains in industrial production in 2018 and early 2019.