|Small Business Optimism||Wholesale Trade||Chemical Wholesale Trade|
Running tab of macro indicators: 18 out of 20
As hiring picked up, the number of new jobless claims fell by 42,000 to 712,000 during the week ending 6 March. Continuing claims fell by 193,000 to 4.144 million and the unemployment rate for the week ending 27 February eased 0.2 percentage points to 2.9%.
As widely expected, consumer prices rose by 0.4% in February, the largest monthly gain since last August. Prices for energy rose the fastest and prices were also higher for food, shelter, and medical care services. Excluding the volatile food and energy components, prices edged higher by 0.1%. Compared to a year ago, consumer prices were up 1.7% Y/Y, the largest annual comparison in a year. Core consumer prices were up 1.3% Y/Y and suggests inflation was not yet a problem in February. Producer prices also came in as expected, showing a 0.5% gain in February. Core producer prices rose 0.3% and follow gains of 0.8% and 0.5% in January and December. Compared to a year ago, headline producer prices were up 2.8% Y/Y and core prices were up 2.2% Y/Y. While both comparisons were at their highest level in more than two years, price pressures remained moderate in February.
Small business optimism improved slightly in February, with the NFIB index edging up 0.8 points to 95.8 in February, a level below the 47-year average. A year earlier, the index stood near an all-time high of 104.5. Five of the 10 Index components improved. Firms are still struggling with the coronavirus (and state and local regulations), harsh winter weather, and an uneven economic recovery. Owners expecting better business conditions over the next six months increased four points to a net negative 19%, a poor reading.
Wholesale trade jumped 4.9% to $531.7 billion in January and follows a large upward revision to December. Gains were widespread among nearly all sectors (excluding miscellaneous non-durables). Total inventories of merchant wholesalers (except manufacturers’ sales branches and offices) rose 1.3% to $661.7 billion at the end of January. Gains were widespread among sectors with some drawdown of inventories among distributors of machinery, apparel, and miscellaneous non-durables. Headline sales were up 5.9% Y/Y and inventories were up 0.6% Y/Y, indicating any imbalances are behind us. Indeed, last year’s inventory-to-sales ratio was 1.31, well above the latest at 1.24.
The rig count rose by one to 402 rigs during the week ending 6 March. Oil refineries are slowly resuming operations after shut-downs during the winter storm. Global oil prices continued to climb on demand optimism.
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, rebounded by 1,823 (3.6%) to 29,591 railcars the week ending 6 March (week 9). Loadings were down 11.5% Y/Y and 4.1% YTD/YTD.
With gains in nearly all segments (except synthetic rubber) chemical prices rose 2.3% in February. Plastic resin prices rose 4.9% and feedstock prices rose an even larger 21.1% during the month and are now up 101.9% Y/Y. Overall chemical prices are up 5.8% Y/Y. On a year earlier basis, the comparisons were all positive with the exception again of synthetic rubber.
Wholesale trade in chemicals rose 1.4% to $10.57 billion in January. Total inventories of merchant chemical wholesalers (except manufacturers’ sales branches and offices) rose 2.4% to $12.13 billion at the end of January. This pushed the inventory-to-sale ratio up from 1.14 to 1.15. A year ago it was 1.17 as sales were off 0.6% Y/Y and inventories were off 2.5% Y/Y.
U.S. trade in chemicals expanded in January, the third month in a row and driven by rising exports. Chemical exports were up 5% in January to $11.6 billion. Basic chemicals represent about 75% of US chemical exports and include petrochemicals and resins which have been building strength in the past few months. Resins exports grew 13% to $2.9 billion in January. Chemical imports were stable in January with all major categories declining in the month except for agricultural chemicals. The surplus in US chemicals trade grew in January by $575 million to $3.2 billion.
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“Boom-Bust Oil Prices: No End in Sight”
Bob McNally – President, Rapidian Energy Group
18 March (12-1:15 PM EST)
National Economists Club
“Global Sustainability Trends and the Impacts Facing Society” Webinar
Marcello Boldrini – Senior Vice President & President of the Chemical Segment, Kraton
24 March (1:00 – 2:00 pm)
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.