The Chemical Activity Barometer (CAB), a leading economic indicator created by the American Chemistry Council (ACC), rose 1.5% in January on a three-month moving average (3MMA) basis following a 1.3% increase in December. On a year-over-year (Y/Y) basis, the barometer rose 1.3% in January.

The unadjusted data show a 1.2% gain in January, accelerating from a 0.4% increase in December. The diffusion index climbed to 79% in January from 71% in December. The diffusion index marks the number of positive contributors relative to the total number of indicators monitored. The CAB reading for December was revised upward by 1.02 points and that for November was revised upward by 0.94 points. As always, the January data are provisional and subject to revision.

“With nine months of gains, the latest CAB reading is consistent with expansion in the U.S. economy,” said Kevin Swift, chief economist at ACC.

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.

In January, production-related indicators were positive. Trends in construction-related resins and related performance chemistry were solid and suggest further gains in housing, a sector that has performed well during the COVID-19 recession.

Reflecting strength in light vehicles and new business investment, resins and chemistry used in other durable goods were strong. Gains in plastic resins used in packaging and for consumer and institutional applications were positive.

Performance chemistry for industry was strong, reflecting a strong manufacturing sector. U.S. exports were positive, while equity prices increased. Product and input prices were positive, as were inventory and other supply chain indicators.