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October Chemical Activity Barometer indicates strong growth, further signs of recovery

The October report of the Chemical Activity Barometer (CAB) showed a strong 0.6 percent growth over the previous month, representing the fourth consecutive monthly increase in the CAB.

The CAB’s three-month moving average (3 MMA) increased in October, suggesting steady growth prospects into 2013. The June, July, August and September 2012 CAB was revised upward from last month’s report, June by 0.1 percent, July by 0.2 percent, August by 0.1 percent and September by 0.3 percent.

The strong growth witnessed this month, driven in particular by rising activity in construction-related materials, is consistent with the U.S. Census Bureau and Department of Housing and Urban Development’s joint report, which highlighted that housing construction was at its highest level in four years.

The CAB has been signaling this recovery in housing for some time now, and our indicators suggest that the outlook for the housing sector will continue to improve into 2013.

This month’s CAB data also shows notable gains in consumer and institutional applications of chemistry, which may indicate positive trends regarding consumer confidence. Improving consumer confidence, which was also observed in the Thomson Reuters/University of Michigan consumer confidence report released earlier this month, helps to lower the odds of another U.S. recession.

That said, the uncertainty arising from the impending fiscal cliff and the ongoing threat of worsening economic conditions in Europe or China continue to pose significant risks to any U.S. economic recovery.

Chemical Activity Barometer for the Latest Six Months and Year-Ago Month

Oct-11 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12
CAB 88.2 89.4 89.0 89.4 89.7 90.2 90.7
% M/M -0.1 -0.7 -0.4 0.4 0.3 0.6 0.6
% Y/Y 1.4 -0.3 -0.3 -0.3 1.4 2.2 2.8
CAB (3 MMA) 88.3 89.9 89.5 89.3 89.4 89.8 90.2
% M/M -0.6 -0.1 -0.5 -0.2 0.1 0.4 0.5
% Y/Y 1.6 -0.3 -0.3 -0.3 0.2 1.1 2.1

 *Percentage changes may not reflect index values due to rounding.

The chemistry industry is one of the largest industries in the U.S., generating $760 billion. The manufacturing sector is the largest consumer of chemical products, and 96 percent of manufactured goods are touched by chemistry.

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