According to the American Chemistry Council (ACC), there is the very method of checking the forecast of Chemical Industry Activity for the start of the new year 2017 using The Chemical Activity Barometer (CAB), and based on this, the outlook for the Chemical industry is quite promising.
What exactly is the CAB and how, might you ask, is it measured? It is a composite index which is comprised of indicators drawn from a range of chemicals and sectors, including chlorine and other alkalis, pigments, plastic resins and other selected basic industrial chemicals. It first originated through a study of the relationship between business cycles in certain chemical production and cycles in the larger economy. It is comprised mainly of 4 Primary Components, each consisting of a variety of indicators: 1) Production; 2) Equity Prices; 3) Product Prices; and 4) Inventories.
The CAB was developed by the ACC and is a leading economic indicator and used to determine turning points and trends within the US economy. It also helps identify changes in other industries within the U.S. economy and highlights the industry’s role in driving economic growth. Within the U.S. economy’s business cycle, the chemical industry has been found to lead consistently, given its early position in the supply chain. Monthly movement can be very volatile so a 3-month moving average of the barometer is provided, allowing a more consistent and visual outlook of national economic trend.
In December of 2016, all FOUR primary components (Production, Equity Prices, Product Prices, & Inventories) for the CAB improved. According to ACC Chief Economist Keven Swift, “The foundation remains strong. Overall trends in construction-related resins, pigments, and related performance chemistry were positive and suggest further gains in housing next year”. Other indicators including prices and inventory were also positive. Because it ended the year strongly, it resulted in a monthly gain of 0.3% and a year-over-year gain of 4.4%, which was significantly higher over the first half of the year. This pace has not been seen since September of 2010. Ultimately these results suggest expanded business grown in early 2017.