|6.4% annual pace||0.7%||8.1%|
|GDP||CAB||Chemical Railcar loadings|
Running tab of macro indicators: 18 out of 20
The number of new jobless claims fell by 13,000 to 553,000 during the week ending 24 April. Continuing claims increased by 9,000 to 3.660 million and the unemployment rate for the week ending 17 was unchanged at 2.6%.
Between additional stimulus and an accelerated pace of vaccinations, consumer confidence rose 12.7 points to 121.7, a 14-month high. Consumers’ appraisal of current business and labor market conditions improved significantly in April. Their expectations rose moderately. Consumers boosted their plans for buying new homes but were less enthusiastic about homes and appliances.
Fueled by economic stimulus and a strong rebound in demand, Q1 GDP rose at a 6.4% seasonally adjusted annual rate. This follows a 4.3% annual gain in Q4. Consumer spending, especially on durable goods, rose sharply. Spending on nondurable goods and services also rose. Business fixed investment continued to gain on strong investment in equipment while residential fixed investment continued to rise at a brisk clip. Private inventories contracted (in part due to the impact of winter storms) which was a small negative contributor. Exports eased and imports rose on strong consumer and industrial demand. Federal nondefense government spending rose at a 44.8% pace, the fastest growth since the 1960’s. Compared to a year ago, U.S. GDP was up 0.4%. The GDP deflator was up 1.9% Y/Y, the fastest pace in two years.
Led by transfer payments (monies from the American Rescue Plan Act of 2021), personal incomes increased $4.21 trillion (21.1%) in March. Gains also occurred in wages and salaries and proprietors’ incomes as state and local lockdowns eased and economic exchanged improved. This led to a $616.0 billion (4.2%) gain in consumer spending that was widespread among goods and services. The savings rate moved up from 13.9% to 27.6% in March. The pace of inflation quickened from 0.2% in February to 0.5% in March and excluding food and energy (or core prices) accelerated from a 0.1% gain to a 0.4% gain. Headline prices were up 2.3% Y/Y and core prices were 1.8% Y/Y. Both represent an acceleration and are concerning.
Durable goods orders rose 0.5% to 256.3 billion in March, a pace slightly less than expectations. New orders for non-defense capital goods excluding airport—a proxy for business investment—rose 0.9%. Orders for communications equipment, fabricated metal products, primary metals, and machinery were all positive. Headline shipments gained 2.5% during the month and unfilled orders gained 0.4%. Inventories rose as well.
The Dallas Fed reported that Texas factory activity expanded at solid clip in April, according to firms responding to the Texas Manufacturing Outlook Survey. The headline measure of current business activity rose 8.4 points to 37.3 in April. Although production eased, it still was expanding and new orders and other measures of manufacturing activity also pointed to strong growth this month, with demand, labor, price, and wage measures reaching all-time highs. Labor market measures indicated robust growth in employment and work hours and price and wage pressures accelerated further in April. Expectations regarding future manufacturing activity pushed further positive in April. The Richmond Fed reported that Fifth District manufacturing activity improved in April. The composite index held steady at 17, indicating continued growth, as all three component indexes — shipments, new orders, and employment — remained positive. Survey responses indicated supply constraints, with the backlog of orders and vendor lead time indexes registering historic highs. Meanwhile, inventories shrank as the indexes for inventories of finished goods and raw materials reached their lowest values on record. Manufacturers were optimistic that conditions would continue to improve in the coming months.
Our CAB leading economic indicator rose 0.7% in April on a three-month moving average basis following a 1.1% increase in March and a 0.9% gain in February. The barometer was up 12.0% Y/Y. The diffusion index reached 100% in April. In April, production-related indicators were positive. Trends in construction-related resins and related performance chemistry were solid, indicative of robust gains in this sector. Resins and chemistry used in other durable goods were strong, reflecting growing orders for light vehicles, furniture, capital equipment, consumer electronics and other durable goods. Plastic resins used in packaging and for consumer and institutional applications were positive, a mark of rising consumer spending. Performance chemistry for industry was largely positive, reflecting strength in manufacturing. U.S. exports were positive. Equity prices showed further gains. Product and input prices were positive, as were inventory and other supply chain indicators. The latest CAB reading is consistent with solid expansion of commerce, trade and industry.
The combined oil & gas rig count eased by one to 437 rigs during the week ending 23 April. With improving prospects for the global economy (and oil demand), oil prices rose this week, as did natural gas prices.
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, rose 8.1% to 34,843 railcars the week ending 24 April (week 16). Loadings were up 24.1% Y/Y, reflecting last year’s disruptions in production due to the onset of COVID, down 0.2% YTD/YTD and the 13-week moving average, which is used to smooth out volatility, was down 1.4%.
The U.S. Geological Survey reported that monthly production of soda ash in February dropped 9.0% to 866 thousand tons. On a year-over-year basis, production was off 6.6%. Stocks fell 4.7% to 287 thousand tons at the end of the month, a 10-day supply. Ending stocks were down 6.2% Y/Y.
According to the ACC Plastics Industry Producers’ Statistics Group, U.S. production of major plastic resins totaled 6.9 billion pounds during March 2021, up 29.1% compared to the prior month, and down 13.6% Y/Y. Year-to-date production was 20.5 billion pounds, an 11.0% decrease as compared to the same period in 2020. Sales and captive (internal) use of major plastic resins totaled 7.0 billion pounds, up 1.3% M/M, and a decrease of 10.5% Y/Y. Year-to-date sales and captive use was 21.7 billion pounds, down 5.2% compared to 2020.
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Discussion Group – The ESG Movement – Where are we Headed? (webcast
4:00-5:00 pm | 6 May 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.