|Consumer Prices||Industrial Production||Chemical Production|
Running tab of macro indicators: 15 out of 20 (This would normally suggest a yellow banner, but the effects of the winter storm are at play and likely transitory)
The number of new jobless claims fell by 193,000 to 576,000 during the week ending 10 April, a pandemic low. Continuing claims rose by 4,000 to 3.734 million and the unemployment rate for the week ending 3 April rose 0.1 percentage points to 2.7%.
Consumer prices rose a slightly larger-than-expected 0.6% in March, the fastest monthly rise since August 2012. A sharp rise in gasoline prices accounted for about half of the gain. Core CPI (excluding food and energy) also increased faster than expected, rising 0.3%, with a near-record monthly advance of 4.4% in hotel prices. With strong base effects, the year-earlier pace for overall CPI accelerated sharply, from 1.7% in February to 2.6% in March. The year earlier gain for core CPI advanced rom 1.3% in February to 1.6%. U.S. import prices rose solidly—and for the fifth month in a row—which added to inflation pressures. Import prices were up 1.2% in March driven by both fuel and nonfuel prices. The gain in nonfuel import prices was 0.8% while fuel import prices were up 6.3%. The price index for U.S. imports increased 6.9% from March 2020 to March 2021, the largest over-the-year advance in the index since a 6.9% rise for the year ended January 2012.
The NFIB latest survey indicates that its measure of small business optimism rose 2.4 points in March to 98.2. March’s reading is the first return to the average historical reading since last November. The NFIB Uncertainty Index increased six points to 81, which was primarily driven by owners being more uncertain about whether it is a good time to expand their business and make capital expenditures in the coming months. Seven of the 10 index components improved and three declined.
Retail sales rebounded strongly in March, rising 9.8%, nearly double expectations and following a 2.7% decline in February when the winter storms affected activity. Sales were aided by stimulus checks, strong job growth and increasing consumer confidence as vaccine distribution increased. Gains occurred in every category and headline sales were up 27.7% from depressed March 2020 levels.
Housing starts jumped 19.4% to a 1.739 million unit pace in March with gains in all four regions and a solid gain in single-family starts. Building permits rose 2.7% from an upwardly revised February level to a 1.766 million unit pace in March. Permits rose in all four regions. Starts were up 37.0% Y/Y and permits were up 30.2% Y/Y from depressed levels last March. Homebuilder sentiment improved slightly, with NAHB Housing Market Index increased one point to 83 this month, as signs of strong demand outweighed builders’ concerns about rising lumber prices and related supply chain issues.
Overall industrial production increased 1.4% in March and follows a drop of 2.6% in February, which largely resulted from widespread outages related to severe winter weather in the South-Central region. In March, manufacturing production and mining output increased 2.7% and 5.7%, respectively. The output of utilities dropped 11.4%, as the demand for heating fell because of a swing in temperatures from an unseasonably cold February to an unseasonably warm March. At 105.6% of its 2012 average, total industrial production in March was up 1.0% Y/Y but 3.4% below its pre-pandemic (February 2020) level. Capacity utilization for the industrial sector increased 1.0 percentage point in March to 74.4%, a rate that is 5.2 percentage points below its long-run (1972–2020) average.
The New York Fed reported that manufacturing activity grew strongly in April, with its headline general business conditions index climbing 8.9 points to 26.3, a multi-year high. New orders and shipments grew at a solid clip, and unfilled orders increased. Delivery times were the longest on record, and inventories were notably higher. Employment levels and the average workweek both expanded modestly. Input prices rose at the fastest pace since 2008, and selling prices climbed at a record-setting pace. Looking ahead, firms remained optimistic that conditions would improve over the next six months, expecting significant increases in employment and prices.
The Philly Fed reported that manufacturing conditions in the region continued to improve this month, with the indicator for general activity rising 5.7 points to 50.2, a solid reading. Shipments and employment rose and firms continued to report increases in prices. The survey’s future indexes indicate continued optimism about growth over the next six months.
Business inventories rose 0.5% to $2,010.8 billion in February reflecting gains among manufacturers and wholesalers. Retailer inventories held steady. At the same time, business sales dropped 1.9% to $1,549.6 billion following a 4.5% jump in January. Sales were down across the three main sectors. As a result, the inventory-to-sales ratio rose from 1.27 to 1.30. A year ago, the ratio was 1.38. Business sales were up 5.7% Y/Y while inventories were off 0.7% Y/Y, indicating tightening supply.
The rig count rose by two to 430 rigs during the week ending 9 April. The latest increase in natural gas inventories was just under analyst expectations.
For the business of chemistry, excluding the temporary impact of the winter storms, the indicators still suggest a green banner for basic and specialty chemicals.
According to data released by the Association of American Railroads, chemical railcar loadings, the best ‘real time’ indicator of chemical industry activity, rose by 1,087 to 33,988 railcars the week ending 10 April (week 14). Loadings were up 17.2% Y/Y, down 2.4% YTD/YTD and the 13-week moving average, which is used to smooth out volatility, fell 3.2%.
The U.S. Geological Survey reported that monthly production of soda ash in January was 952 thousand tons, up 2.7% compared to the previous month and down 0.2% Y/Y. Stocks fell 1.3% compared to December to 301 thousand tons at the end of the month, a 10-day supply. Ending stocks were up 9.5% Y/Y.
Chemical production rose 4.9% in March, only partially offsetting the 12.5% decline in February, the result of the winter storm. Capacity remained offline in March although restarts are gaining strength. Gains occurred in every segment., manufactured fibers being the only segment to decline. Chemical production was off 5.9% Y/Y. Chemical capacity creeped upward and, as a result, chemicals capacity utilization improved 3.4 percentage points to 74.7%. A year earlier it was 79.7%.
U.S. chemical import prices have been building up and advanced 2.1% in March following a 2.5% rise in February. Import prices have risen for ten months in a row and were up 9.0% Y/Y in March.
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Discussion Group – The Supply Chain Crisis: Challenge, Impact, Solutions (webcast)
4:00-5:00 pm | 28 April 2021
Société de Chimie Industrielle
The banner colors represent observations about the current conditions in the overall economy and the business chemistry. For the overall economy we keep a running tab of 20 indicators. The banner color for the macroeconomic section is determined as follows:
Green – 13 or more positives
Yellow – between 8 and 12 positives
Red – 7 or fewer positives
For the chemical industry there are fewer indicators available. As a result we rely upon judgment whether production in the industry (defined as chemicals excluding pharmaceuticals) has increased or decreased three consecutive months.