WASHINGTON, June 26 Demand for chemical products
fell for a third straight month in June, according to new
industry data that suggested slower U.S. economic growth for the
remainder of 2012.
The American Chemistry Council said on Tuesday its Chemical
Activity Barometer fell 1.3 percent to 88 this month. The index,
which is being published for the first time, has a high
correlation to the Federal Reserve's industrial production
It is drawn from a range of chemicals and sectors related to
the production of chlorine and other alkalies, pigments, plastic
resins and other selected basic industrial chemicals.
The index also includes chemical company stock data and
hours worked in the chemicals industry, among others.
Demand for chemical products occurs early in the supply
chain and changes in production is considered a good indicator
of trends in the broader economy.
"After a relatively strong start to 2012, CAB is signaling a
slowing of the U.S. economic recovery," said Kevin Swift, chief
economist at ACC. "It also appears to suggest that the
long-anticipated U.S. housing market recovery is emerging, but
the recovery will be slow."
The index's reading in line with other data showing a
moderation in the pace of economic activity.
The index's three-month moving average, which irons out the
month-to-month volatility, declined in June for a second month,
suggesting anemic growth prospects in the months ahead.
Production-related indicators were flat, while chemical
company equity data, hours worked, and inventories fell.
"As we look at the remainder of 2012, the CAB points to a
continued weakness in economic growth in the second half of the
year," Swift added.
The chemicals industry generated about $760 billion last
year. According to Swift, applying the model back to 1947, the
index has been shown to provide a longer lead in predicting
business cycles than the National Bureau of Economic Research
(NBER), by two to 14 months, with an average lead of eight
The NBER is the official arbiter of recessions in the United