by Bill McBride on 11/24/2015 03:27:00 PM
Tuesday, November 24, 2015
Here is an indicator that I'm following that appears to be a leading indicator for industrial production.
From the American Chemistry Council: Chemical Activity Barometer Stabilizes as Year End Approaches
The Chemical Activity Barometer (CAB), a leading economic indicator created by the American Chemistry Council (ACC), stabilized in November, rising 0.1 percent following three consecutive months of decline. October data was revised up 0.3 percent and September by 0.2 percent. All data is measured on a three-month moving average (3MMA).The pattern reverses a downward trend that had begun to gain momentum. Accounting for adjustments, the CAB remains up 1.3 percent over this time last year, a deceleration of annual growth. In November 2014, the CAB logged a 3.4 percent annual gain over October 2013. ...Click on graph for larger image.
Applying the CAB back to 1919, it has been shown to provide a lead of two to 14 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.
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).
This suggests that industrial production might have stabilized.
Posted by Bill McBride on 11/24/2015 03:27:00 PM