|3.9 points to 60.1||1.7%||0.4%|
|ISM Services PMI||Chemical Wholesale Trade||Global CPRI|
Running tab of macro indicators: 13 out of 20
The number of new jobless claims rose by 2,000 to 373,000 during the week ending 3 July. Continuing claims fell by 256,000 to 3.339 million and the unemployment rate for the week ending 26 June eased 0.1 percentage points to 2.4%.
With gains in both revolving and non-revolving segments, non-mortgage consumer debt rose 0.8% (or $35.3 billion) in May. Credit was up 3.7% Y/Y, faster than the 1.5% Y/Y gain in disposable personal income but slower than the 18.9% Y/Y gain in consumer spending. Although the monthly gain was larger than expected, looking at debt relative to income, it appears that households are still wary of taking on too much debt.
Wholesale trade rose 0.8% to $576.5 billion in May. Gains were widespread, with only drugs, apparel and alcohol wholesalers showing weakness. Total inventories rose 1.3%, leading to an inventory-to-sales ratio of 1.23, much lower than the 1.56 ratio a year earlier. Sales were up 36.8% Y/Y and inventories up 8.2% Y/Y.
The ISM reported that its Services PMI eased 3.9 points to 60.1 in June, which is still a very solid reading. Business activity, new orders, employment, and prices eased. Inventories shrank and supplier deliveries slowed. The backlog of orders grew. Sixteen of 18 industries reported growth.
Global semiconductor sales grew 4.1% to $43.6 billion in May, a level up 26.2% Y/Y. Gains occurred in all regions and compared to a year ago were up in all regions. Global demand for semiconductors remained high in May, and new records for shipments were set. Production has ramped up significantly to address rising demand.
The rig count remained rose by five at 47 rigs during the week ending 2 July. A string of lower than typical inventory builds along with rising demand have resulted in higher natural gas prices. Meanwhile, with OPEC+ unable to reach an agreement on output, oil prices rose to their highest level in six years earlier in the week but have since retreated.
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 by 10.3% to 34,869 railcars the week ending 3 July (week 26). Loadings were up 21.5% Y/Y; year-over-year comparisons remain elevated due to last year’s COVID-related closures. Loadings were up 5.9% YTD/YTD and the 13-week moving average, which is used to smooth out volatility, was up 17.1%.
The U.S. Geological Survey reported that monthly production of soda ash in April was 922,000 tons, down 4.9% compared to the previous month but up 17.6% Y/Y. Stocks rose 20.5% over March to 276,000 tons at the end of the month, a nine-day supply. Ending stocks were down 17.1% Y/Y.
Wholesale trade in chemicals rose 1.7% to $11.40 billion in May. This follows a 1.6% gain in April. Total inventories rose 0.9% to $12.57 billion, leading to a lower inventory-to-sales ratio of 1.10, much lower than the 1.46 ratio a year earlier. Sales were up 35.1% Y/Y and inventories up 1.8% Y/Y.
After two soft months, with rising activity across many nations, our Global Chemical Production Regional Index (Global CPRI) shows that global chemicals production gained 0.4% in May. During May, chemical output increased in North America, Europe, and Africa & the Middle East. Output was weak elsewhere. Headline global production was up 18.8% year-over-year (Y/Y) on a 3MMA basis. Keep in mind that output a year ago was off due to the Covid-19 pandemic. Global production stood at 131.3% of its average 2012 levels. Among chemical industry segments, May results were largely positive with weakness limited to consumer products, plastic resins, and coatings. Considering year-earlier comparisons, production gains occurred in all segments.
During May, global capacity rose 0.2% and was up 2.3% Y/Y. As a result, with rising output, global capacity utilization in the chemical industry turned up 0.1 percentage points to 87.9%. This is well above 75.7% last May and above the long-term (1987-2019) average of 86.4%.
U.S. chemical exports, at $13.5 billion in May, were up 7% compared to April and up 40% compared to May 2020. Exports rose in all categories except inorganics, adhesives and sealants and coatings which were flat compared to April. Chemical imports were down 2% in May to $10.3 billion. Imports were up 28% Y/Y. Monthly imports of agricultural chemicals, inorganics, synthetic rubber, adhesives and sealants and coatings were down compared to April but, up on a Y/Y basis. As imports fell and exports grew in May, the U.S. chemicals trade surplus expanded by $1.1 billion to $3.2 billion.
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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.