|Housing Starts||US CPRI||Specialty Chemical Volumes|
Running tab of macro indicators: 14 out of 20
The number of new jobless claims fell by 26,000 to 900,000 during the week ending 16 January. Continuing claims fell by 127,000 to 5.05 million and the unemployment rate for the week ending 9 January eased 0.1 percentage points to 3.6%.
Existing home sales ended the year on a high note, up 0.7% in December. For the year as a whole, sales were up 5.6% to 5.64 million, the best performance since before the Great Recession. Inventories continued to move lower to 1.07 million homes for sale at the end of the year, representing a 1.9-month supply, both historic lows. The median price was up 12.9% Y/Y. December’s sales were up 22.2% Y/Y. Historically low mortgage rates and new patterns of work and learning have driven home sales in 2020 and are expected to provide momentum into 2021.
Housing starts finished the year on a strong note, up 5.8% in December, the fourth consecutive gain and the seventh gain in the past eight months. Total starts came in at a 1.67 annual million pace, the highest pace in more than 14 years. Homebuilding expanded in all regions except the Northeast, the smallest region. Single family starts rose 12.0% in December, the eighth consecutive increase. Forward-looking building permits also continued to rise, up 4.5% in December with gains across most of the country. Compared to a year ago, housing starts were up 5.2% while building permits were up 17.3% Y/Y.
In January, the Philly Fed Manufacturing Business Outlook Survey indicated manufacturing activity in the region continued to grow, with the current indicator for general activity rising 17.4 points to a solid 26.5. The survey’s current indicators for new orders and shipments increased notably this month and remained positive for the eighth consecutive month. The survey’s future indexes remained at high readings (up 9.7 points to 52.8) and continue to indicate that firms expect growth over the next six months.
SURVEY OF ECONOMIC FORECASTERS
The rig count rose by 13 to 372 rigs during the week ending 15 January. The Saudi Arabian bid to cut oil production to support prices appears have worked. Natural gas inventories declined during the week ending 15 January, a typical draw for this week in the year. Inventories remain above the five-year average.
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 2,255 to 33,940 railcars the week ending 16 January (week 3). Loadings were up 4.5% Y/Y and the 13-week moving average, which is used to smooth out volatility, was up for the sixth week in a row, by 3.3%, the highest reading since early April 2020. The Chlorine Institute (CI) reported that production of chlorine was 32,169 in the final month of 2020, up 1.3% over the previous month but down 8.4% YTD compared to 2019. The output of co-produced caustic soda was up 1.0% compared to November (34,048) and YTD production was down 8.5% Y/Y.
ACC’s U.S. Chemical Production Regional Index (U.S. CPRI), which is measured as a three month moving average, rose by 1.2% in December following a 0.6% gain in November and a 1.2% increase in October. During December, chemical output expanded in all regions with the largest gains in the Gulf Coast and Midwest regions. Compared with December 2019, U.S. chemical production was off by 2.7%, the 19th consecutive month of Y/Y declines, but represents a continued improvement compared to earlier in the year. Chemical production remained lower than a year ago in all regions, with the largest year-ago declines in the Northeast, Mid-Atlantic, and West Coast regions. Chemical production (on a 3MMA basis) continued to expand in all segments, except miscellaneous other inorganic chemicals. As nearly all manufactured goods are produced using chemistry in some form, manufacturing activity is an important indicator for chemical demand. The manufacturing recovery continued for a sixth consecutive month in December, with overall factory activity up by 1.1% (on a 3MMA basis). The trend in production rose in nearly all key chemistry end-use industries, with the strongest gains in iron & steel, appliances, aerospace, construction supplies, foundries, plastic products, tires, paper, structural panels, and apparel.
According to the ACC, U.S. specialty chemicals market volumes ended the year on a strong note, rising 1.2% in December, a more solid pace than the upwardly revised 0.6% gain in November. Of the 28 specialty chemical segments we monitor, 23 expanded in December, up from 13 in November. One segment was stable and four declined. Thus, on a sequential (one-month change) basis, diffusion was 84%, up from 48% in November. Of the 23 segments rising in December, 19 (too many to mention individually) featured gains of 1.0% or more. During December, overall specialty chemicals volumes were off 4.9% Y/Y, a better comparison than in November. Volumes stood at 106.9% of their average 2012 levels in December. This is equivalent to 7.28 billion pounds (3.30 million metric tons). On a year-earlier basis, there were gains in six chemical segments: cosmetic additives, dyes, electronic chemicals, flavors & fragrances, plastic compounding, and water management chemicals. On a year-earlier basis, diffusion was 18% in November. For 2020 as a whole, volumes were off 7.1%.
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
“2021 Economic Outlook” Webinar
Kevin Swift – Managing Director & Chief Economist, American Chemistry
4 February (1:30 – 2:30 pm)
Chemical Marketing & Economics
“The New US Administration – Where Are We Heading?” Virtual Discussion Group
4 February (4:00 – 5:00 pm)
Société de Chimie Industrielle
ICIS World Base Oils & Lubricants Conference Live
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.