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      Blog Home   |   Economic Trends

       

      Blog Home   |   Economic Trends

      Weekly Chemistry and Economic Trends (April 23, 2021)


      1.3%2.8%3.1%
      LEIU.S. CPRISpecialty Chemical Volumes

      MACROECONOMY & END-USE MARKETS

      Running tab of macro indicators: 16 out of 20

      Macro Table

      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

      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.

      LEI

      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 U.S.
      Survey of Economic Forecasters -Global

      SURVEY OF ECONOMIC FORECASTERS

      • By the mid-April, the pace of new cases has stabilized and more than a quarter of the adult population in the U.S. has been fully vaccinated. Indicators suggest that growth expectations continue to strengthen as the economy continues to open up. Continued disruptions from the winter storms and semiconductor shortage are negatively impacting certain sectors, however. Expectations for many indicators continue to rise for 2021 among ACC’s panel of forecasters. Moving into 2022, forecasters expect the rebound to continue, though at a slower pace.
      • Compared to last month’s survey, growth expectations for GDP, consumer spending, and business investment have continued to improve for 2020 as the recovery accelerates into Q2.  U.S. GDP is expected to grow 5.2% in 2021, the fastest pace in more than 3 decades with a 5.4% gain in consumer spending and a 6.6% gain in business investment. Growth shifts lower in 2022 with a 3.9% gain in GDP, the same as reported in last month’s survey.
      • Industrial production, which partially rebounded in March, still struggles from the effects of February’s winter storm and a semiconductor shortage. Industrial production is expected to rise 4.5% in 2020 and 3.5% in 2021, both lower compared to last month’s survey.
      • Expectations for housing starts edged slightly higher with 1.54 million in 2021, but remained steady with 1.52 million in 2022. Despite a semiconductor shortages disrupting vehicle production, expectations for light vehicle sales remained steady at 16.7 million in 2021 and improved to 16.9 million in 2022.
      • With continued improvement in the labor market, the unemployment rate is expected to continue to ease, averaging 5.5% in 2021 (higher than last month’s survey) and 4.3% in 2022.
      • With substantial fiscal stimulus and improving economic fundamentals, growth in aggregate inflation is expected to move higher by 2.4% in 2021 and 2.3% 2022.
      • Compared to last month, expectations for interest rates (10-year treasury) were higher for both 2020 and 2021.
      • Global economic output contracted by 3.6% in 2020 but is expected to rebound by 5.5% in 2021 as vaccines are distributed and the global economic recovery strengthens.
      • Global trade, which fell by 8.2% in 2020 will expand by 7.3% in 2021. The outlook for global industrial output is for a 7.0% gain in 2021.

      ENERGY

      Energy

      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.

      CHEMICALS

      For the business of chemistry, the indicators still bring to mind a green banner for basic and specialty chemicals.

      Chemical Table

      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.

      U.S. CPRI

      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.

      US Specialty Chemical Market Volume

      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.


      For More Information

      ACC members can access additional data, economic analyses, presentations, outlooks, and weekly economic updates through MemberExchange.

      In addition to this weekly report, ACC offers numerous other economic data that cover worldwide production, trade, shipments, inventories, price indices, energy, employment, investment, R&D, EH&S, financial performance measures, macroeconomic data, plus much more. To order, visit http://store.americanchemistry.com/.

      Every effort has been made in the preparation of this weekly report to provide the best available information and analysis. However, neither the American Chemistry Council, nor any of its employees, agents or other assigns makes any warranty, expressed or implied, or assumes any liability or responsibility for any use, or the results of such use, of any information or data disclosed in this material.

      Contact us at ACC_EconomicsDepartment@americanchemistry.com

      Upcoming Events of Interest

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      Note On the Color Codes

      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.

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