USA: Market Scenario ACC’s Chemical Activity Barometer Falls Sharply in March

The American Chemistry Council’s Chemical Activity Barometer fell 2.6 per cent in March on a three-month moving average basis following a downwardly revised 0.1 per cent gain in February, states ACC.

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American Chemistry Council

Washington/USA – The Chemical Activity Barometer (Cab), a leading economic indicator created by the American Chemistry Council (ACC), fell 2.6 per cent in March on a three-month moving average (3MMA) basis following a downwardly revised 0.1 per cent gain in February. On a year-over-year (Y/Y) basis, the barometer fell 1.3 per cent in March.

The unadjusted data shows an 8.0 per cent decline in March following a 1.1 per cent decline in February and a 1.2 per cent gain in January. The unadjusted decline in March is the largest in the post-World War II period. The diffusion index slumped to 27 per cent in March. The diffusion index marks the number of positive contributors relative to the total number of indicators monitored. The Cab reading for February was revised downward by 1.13 points and that for January was revised downward by 0.38 points.

“The Cab signals recessionary conditions in U.S. commerce,” said Kevin Swift, chief economist at ACC. “ACC believes a recession to be occurring when the barometer declines for three consecutive months and falls 3.0 per cent or more from the peak. As of March, the Cab has declined for two straight months and fallen 8.9 per cent from the peak.”

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

Production-related indicators generally declined in March. Trends in construction-related resins, pigments and related performance chemistry were generally negative. Plastic resins used in packaging and for consumer and institutional applications were generally negative. Performance chemistry was negative and U.S. exports were weak. Equity prices collapsed, but are improving this week. Product and input prices declined. Inventory and other supply chain indicators were negative.

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