Chemical Activity Barometer

Chemical Activity Barometer

May 23, 2017 – The Chemical Activity Barometer (CAB) is a composite index, which is comprised of indicators drawn from a range of chemicals and sectors, including chlorine and other alkalies, pigments, plastic resins and other selected basic industrial chemicals. It has been shown to provide a lead of 2 to 14 months, with an average lead of 8 months at cycle peaks as determined by the National Bureau of Economic Research.

The CAB increased by 0.2% in May to a level of 117.59, after a revision (-0.11%) to April dropping to 117.39. Year-over-year from last May were up 4.1%. With a 3 month moving average of 117.42, an increase of 0.2% from the month before. The production component was approximately the same as the previous month, equity prices dropped, product prices and inventories rose in May.

The CAB is an index that leads overall industrial production and business cycles. Industrial production should increase steadily for the rest of the year and taper later on. This is because of the CAB’s solid growth trend from November last year to March before growing modestly for two months. The CAB is volatile month to month so a three-month moving average is typically used. However, we assume the CAB upward trend will continue moving forward.

Chemical Activity Barometer