US Chemical Sector Extends Recovery

Following a sharp decline in chemical industry activity in the first half of the year, the U.S. chemical industry strengthened further in July, according to the latest data from the American Chemistry Council.
         
The figures show that the ACC Chemical Activity Barometer, or CAB, rose 2.7 percent in July on a three-month moving average basis however the barometer was down 8.9 percent on a year-over-year basis.

“With three consecutive months of gains, the latest CAB reading is consistent with recovery in the U.S. economy,” said Kevin Swift, chief economist at ACC.


U.S. Exports Weak

Unadjusted data for July suggested a 1.3 percent gain for the month following a 3.4 percent gain in June.

“Production-related indicators were mixed in July. Despite improvement in new home sales, housing starts and building permits, trends in construction-related resins, pigments and related performance chemistry were soft,” the ACC noted.

Headquartered in Washington D.C., the ACC is an independent industry association represents a diverse set of companies engaged in the business of chemistry using member engagement, political advocacy, communications and scientific research.


Diffusion Index Rises

The number of positive contributors relative to the total number of indicators monitored, known as the diffusion index, pointed to positive momentum in the market, with the index rising to 41 percent.

“Performance chemistry strengthened, while U.S. exports were mixed. Equity prices gained, and product and input prices strengthened. Inventory and other supply chain indicators turned positive,” an ACC spokesperson said.

The CAB index is recognized a key signal for breakbulk demand in the chemicals industry and is composed of four main components of production; equity prices; product prices; and inventories and other indicators. The sector’s early position in the supply chain, means the CAB index consistently leads the U.S. economy’s business cycle and analysis of the CAB as a forecasting tool. ACC suggests that it provides a lead of two to 14 months, with an average lead of eight months at cycle peaks as determined by the National Bureau of Economic Research, according to the ACC.