Chemical Activity Barometer Has Been Falling Since April, Leads NBER By 8 Months On Average

First off, hat tip to for introducing me to this indicator. View their interactive chart comparing chemical activity to industrial production since 1990. The American Chemistry Council's Chemical Activity Barometer (CAB) has been falling month-over-month since April. Look at the table from their press release today. The ACC said CAB leads the NBER (National Bureau of Economic Research) by eight months on average. So another forward looking indicator to keep an eye on. The CAB also shows that "construction-related activity has weakened".

source: ACC

Here's more from the release:

"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 model back to 1947, the CAB has been shown to provide a longer lead (or perform better) than the National Bureau of Economic Research (NBER), 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 United States.

“After a relatively strong start to 2012, ACC's CAB is signaling a slowing of the U.S. economic recovery,” said Dr. Kevin Swift, Chief Economist at ACC. “The CAB also appears to suggest that the long-anticipated U.S. housing market recovery is emerging, but the recovery will be slow.”

“As we look at the remainder of 2012, the CAB points to a continued weakness in economic growth in the second half of the year,” Swift added.

The preliminary June data from the CAB showed a decrease of 1.3 percent over the previous month. This follows relatively strong gains during the early months of 2012.

In addition to the slowdown of broader economic recovery, construction-related activity has weakened as production of chlor-alkalies and some construction-related polymers declined after several months of increased production. This decrease is significant because these chemicals are used to manufacture a variety of plastic products for building and construction of housing, such as siding, window frames and doors."
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