|8.4 points to record 63.7%||1.8%||0.4%|
|Services PMI||Chemical Shipments||Chemical Wholesale Trade|
Running tab of macro indicators: 11 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 rose by 16,000 to 744,000 during the week ending 3 April. Continuing claims fell by 16,000 to 3.734 million and the unemployment rate for the week ending 27 March remained at 2.6%.
Consumer credit rose 0.7% ($27.6 billion) to $4.206 billion in February, a level on par with that a year earlier. Both revolving and non-revolving credit gained. Consumer credit collapsed during the COVID recession but has steadily been recovering since bottoming in May. This sets the stage for additional consumer spending.
The U.S. trade deficit was up $3.3 billion in February to $71.1 billion, the largest it has ever been. The deficit has grown steadily since February 2020 and includes a $30.3 billion deficit with China and a $19.0 billion deficit with the EU. U.S. exports were down 2.6% to $187.3 billion in February, a level 10.0% below the same time in 2020. In February, exports fell in capital goods; consumer goods; foods, feeds, and beverages; and autos and auto parts. Exports of services, including travel, also declined in February. U.S. imports were down 0.7% to $258.3 billion in February, a level up 5.0% Y/Y. In February, imports fell in autos and consumer goods including pharmaceutical preparations; imports increased in industrials supplies and materials including finished metal shapes, crude oil and natural gas.
With a 5.9% gain in energy, producer prices rose a larger-than-expected 1.0% in March, leaving prices at a level up 4.2% Y/Y. Excluding food and energy, so-called core-PPI rose 0.7% leaving these prices up 3.1% Y/Y. Prices for gasoline, diesel fuel, residential electric power, industrial chemicals, steel mill products, and processed poultry also moved higher. In contrast, beef and veal prices fell as did fresh and dry vegetables and surgical and medical instruments.
The ISM Services survey indicated that the services sectors expanded in March, with the headline measure rising a larger-than-expected 8.4 points to 63.7%, an all-time high. The gain was led by new orders, followed by production and most other measures. Inventories and order backlogs slowed but were still expanding. Prices paid remain at elevated levels. All 18 services industries reported growth in March.
Wholesale trade fell 0.8% to $538.3 billion in February. This follows a 4.4% gain in January. There was weakness in automotive, furniture, lumber, professional equipment, hardware, machinery, paper, drugs, apparel, farm products, alcohol, and other wholesale segments. There were gains among wholesalers of computers, metals, chemicals, and petroleum with mixed results elsewhere. The inventory-to-sales ratio rose slightly to 1.27, a level off from 1.32 one year earlier. Overall sales were up 6.4% Y/Y while inventories were up 2.0% Y/Y.
Following nine consecutive months of gains, factory orders fell by 0.8% in February. Gains in orders for mining & oilfield machinery, power equipment, aluminum, computers, electric lighting equipment, and civilian aircraft, offset declines in iron & steel, construction machinery, appliances, construction supplies, and fabricated metal products. Compared to a year ago, core orders were up 8.5%, while headline orders were up 1.7% Y/Y. Partially reflecting the impact of the winter storms, factory shipments fell 2.0% and inventories rose by 0.8%. As a result, the inventories-to-shipment ratio rose from 1.36 in January to 1.40 in February, which is the same level as a year ago.
Global semiconductor industry sales eased 1.0% to $39.6 billion in February, a level still up 14.7% Y/Y. February sales increased in Asia Pacific/All Other and Europe, held flat in China, and decreased in Japan and the Americas. Compared to a year earlier, sales were up in all markets. The IMF released their World Economic Outlook report. They forecast global growth of 6.1% this year (2021) moderating to a 4.4% pace in 2022.
The IMF’s projections are for faster growth than had been anticipated the last time they released their report in October 2020. The upward revisions reflect additional fiscal support in a few large economies, the anticipated vaccine-powered recovery in the second half of 2021, and continued adaptation of economic activity to subdued mobility. IMF staff report believe the contraction in economic activity would have been much worse had it not been for extraordinary policy support. Still, according to the IMF, high uncertainty surrounds the outlook, related to the path of the pandemic, the effectiveness of policy support to provide a bridge to vaccine-powered normalization, and the evolution of financial conditions.
The rig count rose by 12 to 428 rigs during the week ending 2 April. With the winter heating season now behind us, natural gas inventories rose by 20 BCF to 1,784 BCF, a level off 1.3% from the five-year average for this week.
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 848 to 32,901 railcars the week ending 3 April (week 13). Loadings were up 8.7% Y/Y, down 3.8% YTD/YTD and the 13-week moving average, which is used to smooth out volatility, fell 3.7%.
Chemical producer prices rose 2.3% in March, leaving prices at a level up 5.8% Y/Y. Gains were widespread and particularly strong in plastic resins and bulk petrochemicals & organics, segments affected by the winter storms. Synthetic rubber was the only segment where producer prices declined. During the month, feedstock prices rose 8.3%.
Chemicals wholesale trade rose 0.4% to $10.15 billion in February. This follows a 1.0% gain in January. Inventories rose 0.5% to $11.88 billion The inventory-to-sales ratio was thus stable at 1.17, a level slightly off from 1.19 one year earlier. Overall sales were up 0.7% Y/Y while inventories were off 1.3% Y/Y.
As expected, chemical shipments fell in February, down 1.8%, as winter storms disrupted activity along the U.S. Gulf Coast. All major categories declined. Chemical inventories moved higher, however, by 0.8%, with gains in coatings & adhesives and other chemical inventories. Inventories of agricultural chemicals declined. The inventories-to-shipments ratio rose from 1.13 in January to 1.16 in February. A year ago, the ratio was 1.17. Compared to a year ago, chemical inventories were ahead by 0.2% Y/Y, while shipments were up 1.1% Y/Y.
The U.S. chemicals trade surplus fell by $366 million to $2.8 billion in February. Chemical exports were down by 8.6% or $997 million to $10.7 billion. With the exceptions of consumer products which increased by 3%, there were declines in all other categories of chemical exports. Chemical imports were down 7.5% in February to $7.8 billion with declines in all major categories.
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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.