US chemical activity keeps expanding in May

24 May 2016

Stefan Baumgarten

The American Chemistry Council’s (ACC) chemical activity barometer (CAB) expanded 1.0% in May, following an upward-revised 0.8% increase in April and a 0.1% increase in March, the trade group has said.

The CAB is a three-month moving average (3MMA) measure with four primary components: production; equity prices; product prices; and inventories and other indicators. In May, all components improved for a second month in a row.

Production-related indicators were positive, with improvement in plastic resins used in packaging and trends in construction-related resins, pigments and related performance chemistry still hinting at an ongoing strengthening of the housing sector, the ACC said.

Equity prices further rebounded in May, joined by a firming in product prices. Inventories and other downstream indicators were positive.

"Trends suggest increased business activity into the fourth quarter," the group added.

Compared with May 2015, the CAB measure was up 2.3% year on year.

The CAB is seen as a leading economic indicator. The chemical industry has been found to consistently lead the US economy’s business cycle given its early position in the supply chain, and the CAB can be used to determine turning points and likely trends in the wider economy, according to the ACC.

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