|LEI||U.S. CPRI||Specialty Chemical Volumes|
Running tab of macro indicators: 16 out of 20
The number of new jobless claims fell by 39,000 to 547,000 during the week ending 17 April. Continuing claims fell by 34,000 to 3.674million and the unemployment rate for the week ending 10 April eased 0.1 percentage points to 2.6%.
Existing home sales fell 3.7% in March to a seasonally adjusted 6.01 million annual pace. Compared to a year ago, home sales were up 12.3% Y/Y. The inventory of unsold homes rose 3.9% in March but was off 28.2% Y/Y. At the current sales pace, inventories represent a 2.1-month supply, down from 2.0 months in February. The median sales price was up 17.2% Y/Y with gains across every region. The market remains tight with high demand for housing fueled by changing patterns of work and historically low mortgage rates. New home sales rose 20.7% to a 1.021 million-unit pace in March. Gains occurred in the Northeast, Midwest and South but declined in the West. Homes for sale (or inventory) remained steady at 307,000 units. This pushed months’ supply down to 3.6 months. A year ago, it was 6.5 months. Sales were up 66.8% Y/Y and inventories off 18.2% Y/Y. The median sales price of new houses sold in March 2021 was $330,800, a level up 0.8% Y/Y.
The Kansas City Fed reported that Tenth District manufacturing activity expanded further with the highest monthly composite reading in survey history, and expectations for future activity increased considerably. Prices paid for raw materials also reached the highest level in survey history. In addition, finished goods prices expanded more from a month ago and a year ago.
The index of leading economic indicators (LEI) rose 1.3% in March, and is now up 7.9% Y/Y. With all ten indicators increasing, the gain was widespread and driven by positive contributions by all. The recent trend in the LEI is consistent with the economy picking up in the coming months, and The Conference Board now projects real GDP could expand 6.0% in 2021.
SURVEY OF ECONOMIC FORECASTERS
The combined oil & gas rig count rose by eight to 438 rigs during the week ending 16 April. Global oil prices weakened on rising global cases of Covid-19 which set new highs this week on a 7-day moving average basis.
For the business of chemistry, the indicators still bring to mind 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, fell by 5.1% to 32,244 railcars the week ending 17 April (week 15). Loadings were up 10.8% Y/Y, down 1.6% YTD/YTD and the 13-week moving average, which is used to smooth out volatility, was down 2.8%. The Chlorine Institute (CI) reported that production of chlorine was 27,898 in March, up 21.0% over February’s historical low. YTD production was down 19.4% Y/Y, reflective of storm-related outages in the early part of the year. The output of co-produced caustic soda rose to 29,045, up 19.0% over February, but YTD production was slipped, and was down 20.5% Y/Y.
The U.S. Chemical Production Regional Index (U.S. CPRI), which is measured as a three-month moving average, fell by 2.8% in March following a 3.9% decline in February and a 0.6% increase in January. During March, chemical output fell in all regions as the impact of the February winter storm continued to disrupt chemical production in the Gulf Coast and other parts of the country that rely on raw materials from the Gulf Coast. Compared with March 2020, U.S. chemical production remained off by 5.8% on a year-over-year basis, the twenty-second consecutive month of Y/Y declines, and a deterioration reflecting the lingering impact of the winter storms. Chemical production was lower than a year ago in all regions.
As measured on a three-month moving average (3MMA) basis, chemical production was mixed in March with an improving trend in the production of chlor-alkali, adhesives, coatings, other specialties, manufactured fibers, synthetic rubber, and fertilizers. These gains were offset, however, by continued weakness in organic chemicals, plastic resins industrial gases, synthetic dyes & pigments, other inorganic chemicals, crop protection chemicals and consumer products.
As nearly all manufactured goods are produced using chemistry in some form, manufacturing activity is an important indicator for chemical demand. Following the first decline in six months in March, manufacturing output edged higher in April, by 0.1% (on a 3MMA basis). The 3MMA trend in manufacturing production was mixed with gains in the output of food & beverages, appliances, aerospace, construction supplies, machinery, fabricated metal products, computers & electronics, semiconductors, refining, foundries, rubber products, structural panels, textile product mills, apparel, and furniture.
U.S. specialty chemicals market volumes are recovering from the winter storm, with volumes rising 3.1% in March, only partially offsetting the 4.5% decline in February. Of the 28 specialty chemical segments we monitor, twenty-four expanded in March, up from three in February, and 21 in January. Four segments declined. Thus, on a sequential (one-month change) basis, diffusion was 86%, up from 11% in February and 77% in January. Nineteen segments (too many to list) featured gains of 1.0% or more.
During March, overall specialty chemicals volumes were off 1.2% on a year-over-year (Y/Y) basis. Volumes stood at 107.1% of their average 2012 levels in February. This is equivalent to 7.29 billion pounds (3.31 million metric tons). On a year-earlier basis, there were gains in 19 chemical segments. On a year-earlier basis, diffusion was 68% in March.
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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.