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Industrial activity signals further gains in U.S. economy

Staff Writer |
The Chemical Activity Barometer (CAB), an economic indicator created by the American Chemistry Council (ACC), expanded 0.5 percent in February on a three-month moving average (3MMA) basis, its fifth such solid gain following the 2017 hurricanes.

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On an unadjusted basis, growth was just 0.1 percent. The CAB is up 4.2 percent on a 3MMA compared to a year earlier.

The Chemical Activity Barometer has four primary components, each consisting of a variety of indicators: 1) production; 2) equity prices; 3) product prices; and 4) inventories and other indicators.

February production-related indicators showed continued improvement, including gains in construction-related resins and pigments; plastic resins used for consumer packaging; performance chemistries; and U.S. exports.

While equity prices receded, inventory and other indicators were very positive.

Overall, the diffusion index contracted to 53 percent. This index marks the number of positive contributors relative to the total number of indicators monitored.

The Chemical Activity Barometer is a leading economic indicator derived from a composite index of chemical industry activity.

The chemical industry has been found to consistently lead the U.S. economy's business cycle given its early position in the supply chain, and this barometer can be used to determine turning points and likely trends in the wider economy.

Month-to-month movements can be volatile so a three-month moving average of the barometer is provided. This provides a more consistent and illustrative picture of national economic trends.

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