The Chemical Activity Barometer (CAB), a leading economic indicator created by the American Chemistry Council (ACC), has reached its highest peak since March 2008.
Even accounting for seasonal adjustments, the unusually harsh winter skewed earlier data, and this month’s barometer reflects upward revisions for January, February, and March of 0.1, 0.2, and 0.1 points, respectively.
On a three-month moving average (3MMA) basis, the April CAB reading showed a healthy 0.5 percent gain over March. Together with the upward revisions, this suggests further growth momentum in the broader economy in the months ahead.
“After an economic deep freeze over the past several months, it looks like the U.S. economy is finally starting to bloom,” said Dr. Kevin Swift, Chief Economist at ACC. “Economists around the country are coalescing around the idea that the fundamentals of our economy may be healthier than previously believed. This is something that the Chemical Activity Barometer has been suggesting for quite some time.”
Recent Federal Reserve data showed US manufacturing output rose for the second consecutive month, and that industrial production was up 0.7 percent, besting many analysts’ expectations. Tracking closely with the CAB, the Federal Reserve data also revealed capacity utilization to be at its highest point since June 2008.
The CAB, shown to lead US business cycles by an average of eight months at cycle peaks, stands at 95.2, up 3.2 percent over one year ago, and is showing an increased pace of growth over the fourth quarter of 2013. Overall results in four primary components of April’s CAB were mixed-to-positive, with product/selling prices, production, and inventories up, while equity prices were flat, but still outpacing the broader market.