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ACC: Leading Economic Indicator Shows Encouraging Expansion in Four Areas; Eighth Consecutive Monthly Gain

March 28, 2013

The American Chemistry Council's (ACC) monthly Chemical Activity Barometer (CAB) continues to show a slowly expanding U.S. economy, increasing 0.4 percent over February on a three-month moving average (3MMA) basis. The year over year 3MMA showed a 2.9 percent gain over March 2012. CAB readings for November through February were each revised upwards by 0.1 points, bringing February's year over year 3MMA to a 3.0 percent gain. The CAB is a leading economic indicator derived from a composite index of chemical industry activity. Due to its early position in the supply chain, chemical industry activity leads that of the overall economy. February was the CAB's seventh consecutive monthly gain.

"Positive gains in four broad areas - production indicators, equity prices, product prices, and inventories - are encouraging signs for the health of the U.S. economy," said Dr. Kevin Swift, ACC chief economist. "We are beginning to see a slower year over year comparison, but overall the Chemical Activity Barometer continues to signal an expanding U.S. economy through 2013, with the possibility of accelerated growth in 2014 and beyond. While rising activity continues in construction-related coatings, pigments, and plastic resins, supporting a continued recovery in the housing sector, we anticipate that recovery to begin a more slow progression. Gains shown in equity and product prices are also key indicators for economic health."

The business of chemistry is a $760 billion enterprise and one of America's most significant manufacturing industries, with more than 96 percent of all manufactured goods touched by products of chemistry.

The chemical industry's early position in the supply chain uniquely positions the CAB against other economic indicators. The CAB provides a long lead for business cycle peaks and troughs and can help identify emerging trends in the wider U.S. economy within sectors closely linked to the business of chemistry such as housing, retail and automobiles. Applying the CAB back to 1919, it has been shown to lead the National Bureau of Economic Research (NBER) cycle dates, by two to 14 months, with an average lead of eight months. NBER is the organization that provides the official start and end dates for recessions in the U.S.