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Chemical Activity Barometer (CAB) Strengthens in June

July 8, 2013

The U.S. economy continues its slow growth, according to the American Chemistry Council's (ACC) monthly Chemical Activity Barometer (CAB). The economic indicator, shown to lead U.S. business cycles by an average of eight months at cycle peaks, increased 0.3 percent over May on a three-month moving average (3MMA) basis. The barometer is up 3.5 percent over a year ago. Heightened production of plastic resins used in consumer and institutional applications continues to expand, suggesting further economic gains driven by the consumer.

"Virtually all production-related indicators strengthened in June," said Dr. Kevin Swift, chief economist at the ACC. "Most notable is the healthy-paced production of plastic resins used in consumer and institutional applications, suggesting the consumer-led economic expansion is still in place."

Although conditions in Japan are improving and Europe's recession appears to be bottoming out, growth in China has slowed and prospects in other Asian markets remain weak, producing a plateau in U.S. export volumes.  

The CAB is a leading economic indicator derived from a composite index of chemical industry activity. 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 at cycle peaks. NBER is the organization that provides the official start and end dates for recessions in the U.S.

The business of chemistry is a $770 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.

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