by Calculated Risk on 10/24/2017 12:48:00 PM

Note: This appears to be a leading indicator for industrial production.

From the American Chemistry Council: Chemical Activity Barometer Bounces Back, Following Historic September Storms

The Chemical Activity Barometer (CAB), a leading economic indicator created by the American Chemistry Council (ACC), notched an increase over September’s reading both on a three-month moving average (3MMA) basis and an unadjusted basis. The CAB was up 0.2 percent and 0.7 percent, respectively. The increases reflected a bounce back from the effects of Hurricanes Harvey and Irma. Compared to a year earlier, the CAB is up 3.0 percent on a 3MMA basis, a slower pace than the previous nine months, but one that continues to suggest further gains in U.S. business activity into 2018.
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Applying the CAB back to 1912, it has been shown to provide a lead of two to fourteen months, with an average lead of eight months at cycle peaks as determined by the National Bureau of Economic Research. The median lead was also eight months. At business cycle troughs, the CAB leads by one to seven months, with an average lead of four months. The median lead was three months. The CAB is rebased to the average lead (in months) of an average 100 in the base year (the year 2012 was used) of a reference time series. The latter is the Federal Reserve’s Industrial Production Index.
emphasis added

Click on graph for larger image.

This graph shows the year-over-year change in the 3-month moving average for the Chemical Activity Barometer compared to Industrial Production.  It does appear that CAB (red) generally leads Industrial Production (blue).

CAB increased solidly in early 2017 suggesting an increase in Industrial Production. The year-over-year increase in the CAB has slowed recently, but this still suggests further gains in industrial production in 2018.