Chemical sector barometer indicates strong Q4 for US economy

22 October 2013 16:45  [Source: ICIS news]

WASHINGTON (ICIS)--The US economy should end the year with good growth in this fourth quarter, a key chemicals industry indicator suggested on Tuesday, despite the recent federal government shutdown and related disruptions.

In its monthly chemical activity barometer (CAB), the American Chemistry Council (ACC) said that underlying economic measures indicate that the nation’s economy will show better growth in the final three months of 2013, in large part because of consumer spending.

The council said that the CAB for October shows a gain of 0.3% from September in the three-month moving average to a reading of 93.6.

The barometer is up by 3.1% compared with the same month a year ago and is at its highest point since June 2008, the council said.

The CAB combines data from a range of chemicals and sectors, including production of chlorine and other alkalis, pigments, plastic resins and other basic industrial chemicals.

The barometer also factors in chemical company stock data, hours worked in chemicals manufacturing and publicly available chemicals pricing and inventories.  Broader data sets, such as housing starts and new orders for general manufactured goods, also are included, according to the ACC.

Because chemicals hold an early position in the nation’s supply chain, developments in the industry can presage activity in the broader economy. The council says that the CAB has been shown to lead US business cycles by an average of eight months at cycle peaks.

“Despite the uncertainty being fuelled by political gridlock in Washington, the fundamentals of our economy appear to be healthy,” said ACC chief economist Kevin Swift.

He noted that the October gain follows CAB advances in August and September as well.

Swift took issue with some economic data sets suggesting that consumer spending is slowing.

“Production of plastic resins used in consumer applications appears actually to be strengthening,” Swift said, “suggesting further gains driven by consumers.”

Consumer activity is the principal driving engine of the US economy, accounting for as much as 70% of all commerce and production. Consequently, if consumer spending and consumer-driven industrial production are on the rise, prospects are stronger for a steadily improving economy.

Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy


By: Joe Kamalick
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