May 2020 Chemical Activity Barometer Again Declines And Consistent With A Recession

from the American Chemistry Council

The Chemical Activity Barometer (CAB), a leading economic indicator created by the American Chemistry Council (ACC), fell 5.4 percent in May on a three-month moving average (3MMA) basis following a 5.4 percent decline in April. On a year-over-year (Y/Y) basis, the barometer fell 12.4 percent in May. 

The unadjusted May data shows a 0.3 percent decline following a 6.3 percent drop in April and an 8.9 percent decline in March. The diffusion index fell from 35 percent to 29 percent in May as production declines became more widespread. The diffusion index marks the number of positive contributors relative to the total number of indicators monitored. The April CAB reading was revised upward by 0.37 points and the March reading was revised downward by 0.08 points.

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.

Production-related indicators generally declined in April. 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 mixed. Performance chemistry was negative and U.S. exports were weak. Equity prices are improving. Product and input prices were negative. Inventory and other supply chain indicators were negative. Production-related indicators declined in May. Trends in construction-related resins, pigments and related performance chemistry were negative, as were resins used in appliances, light vehicles, machinery and other durable goods. Plastic resins used in packaging and for consumer and institutional applications were mixed. Performance chemistry was negative and U.S. exports were weak. Equity prices are improving and product and input prices are firming. Inventory and other supply chain indicators were negative.

Per Kevin Swift, chief economist at ACC:

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