The economy is continuing to grow but at a much slower pace than it did last year, according to the Chemical Activity Barometer.

Published monthly by the American Chemistry Council, the CAB posted a 0.3% decline in January on a three-month moving average (3MMA) basis. This marks the barometer’s third consecutive month-over-month drop and suggests a slower rate of economic growth, the council says.

On a year-over-year (Y/Y) basis, the barometer is up 0.8% (3MMA), a pronounced slowdown in the pace of growth as compared with late last year, ACC reports. The unadjusted measure of the CAB was flat (0.0%) in January and declined 0.2% in December and 0.8% in November.

“The CAB continues to signal gains in U.S. commercial and industrial activity through mid-2019, but at a much slower pace as growth (as measured by year-earlier comparisons) has turned over,” observes Kevin Swift, chief economist at the ACC. “Despite three straight months of decline in the barometer, the cumulative decline is 1.0% – well below the 3.0% that would signal negative growth in the U.S. economy.”

The Chemical Activity Barometer has four primary components, each consisting of a variety of indicators: production; equity prices; product prices; and inventories and other indicators.. 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 importance of the barometer can be pegged to the fact that the chemical industry has been found to consistently lead the U.S. economy’s business cycle given its early position in the supply chain, and this barometer can be used to determine turning points and likely trends in the wider economy.

Month-to-month movements can be volatile so a three-month moving average of the CAB is included. It is said to provide a more consistent and illustrative picture of national economic trends.