|Retail Sales||Industrial Production||Chemical Production|
Running tab of macro indicators: 14 out of 20
The number of new jobless claims jumped by 53,000 to a disappointing 898,000 during the week ending 10 October, continuing within — but at the upper end of — a 60,000 range during the last six weeks. Continuing claims fell by 1.165 million to 10.018 million and the unemployment rate for the week decreased 0.9 percentage points to 6.8%.
Retail sales exceeded expectations, rising 1.9% in September, following a 0.6% increase in August. Sales were higher in every category except electronics & appliances. The largest gains were in clothing, sporting goods, department stores, and motor vehicles. Restaurant sales also continued to recover, but remain off 14.4% from a year ago. As consumer spending has shifted away from services and toward goods because of the pandemic, retail sales have recovered strongly and, compared to a year ago, sales were up 5.4%.
The NFIB index of small business optimism rose 3.8 points to 104.0 in September, a historically high reading. Nine of the 10 index components improved and one declined. Earnings trends improved and owners are expecting better business conditions over the next six months.
As expected, consumer prices rose 0.2% in September, the fourth consecutive gain. Core consumer prices also rose by 0.2%, after larger increases in July and August. The index for used cars and trucks rose 6.7%, the largest monthly gain in more than 50 years. Prices for food were unchanged as higher prices for food consumed at home offset lower prices for food consumed away from home. Compared to a year ago, consumer prices were up 1.4% while core consumer prices were up 1.7% Y/Y, both representing an acceleration. Producer prices rose 0.4% in September largely due to higher prices for transportation and warehousing, accommodation, irons and steel scrap, electric power, vegetables, and other foods. Prices less food and energy (or core producer prices) also rose 0.4% in September and were up 1.2% Y/Y. Headline prices were up 0.4% Y/Y, the first positive year-earlier comparison since March. Import prices rose 0.3% in September, the fifth and smallest gain since April. Lower prices for imported fuels were more than offset by a 0.6% gain in nonfuel import prices. The September increase was primarily driven by higher prices for nonfuel industrial supplies and materials, in particular selected building materials and unfinished metals. Export prices were also up, by 0.6%, on higher prices for both agricultural and nonagricultural goods. Compared to a year ago, import prices remained off by 1.1% Y/Y, while export prices were off 1.8% Y/Y.
Combined business inventories continued to expand by 0.3% in September with gains in retail and wholesale inventories. Manufacturing inventories were flat. Combined business sales rose 0.6%, with gains across all three segments. Compared to a year ago, inventories were off 5.5% while sales were off 0.4% Y/Y. The inventories-to-sales ticked lower to 1.32, suggesting inventories were relatively leaner than they were a year ago when the ratio was 1.39.
Following gains the previous four months, industrial production unexpectedly slipped by 0.6% in September. It was the first decline since the lockdowns. Manufacturing output declined by 0.3% with mixed performance among industries. The largest gains were in aerospace, textile mills, and printing. The largest declines were in motor vehicles, computers, and petroleum products. Compared to a year ago, industrial production remained lower by 7.3%. Capacity utilization eased by 0.5 percentage points to 71.5%. A year ago, capacity utilization was at 77.4%. The report suggests that the recovery in industrial activity may be stalling.
The New York Fed’s Empire State Manufacturing Survey indicated that October manufacturing activity expanded modestly in New York State, with headline general business conditions index easing 6.5 points to +10.5, pointing to a slower pace of growth than in September. New orders and shipments continued to increase, while unfilled orders continued to decline. Inventories moved lower, and delivery times were little changed. Manufacturers reported a small increase in employment, and a significantly longer average workweek. Input prices increased at about the same pace as last month, and selling prices continued to increase slightly. Looking ahead, firms remained optimistic that conditions would improve over the next six months, though optimism was somewhat lower than last month. The Philadelphia Fed’s Manufacturing Business Outlook Survey indicates that manufacturing activity in the region picked up this month, with the headline index of current activity surging 17.3 points to 32.3. The survey’s current indicators for new orders, and shipments showed notable improvement. Most future indexes increased and continue to reflect optimism among firms about growth over the next six months.
The IMF released their World Economic Outlook report. Their expectations are for continued recovery from the depths reached in April. However, there will be challenges as long as the pandemic continues its spread. Some economies are pulling back on reopening and reinstating partial lockdowns. IMF expects -4.4% growth in the global economy this year, a less severe contraction than projected back in June. Global growth is projected at 5.2% for 2021.
The rig count rose by three to 266 rigs during the week ending 9 October. Oil prices moved higher this week on strong inventory draws for crude and products that suggests demand is firming. Natural gas prices also moved higher as cooler weather is moving in and the past week’s inventory build was smaller than expected. Despite the smaller build, natural gas inventories are above their five-year historic range.
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 1.1% to 31,035 railcars the week ending 10 October (week 41). Loadings were up 0.6% Y/Y, the first positive Y/Y comparison since 21 March (week 12), On a YTD basis, loadings were down 5.0% compared to 2019. Loadings have been on the rise for 7 of the last 13 weeks. The 13-week moving average, which is used to smooth out volatility, was down 4.7%, the 15th consecutive week of improving comparisons, indicating a slow recovery to railcar loadings.
Following gains in the previous three months, chemical industrial production was stable in September. There was mixed performance among segments: inorganic chemicals, bulk petrochemicals & organics, plastic resins, synthetic rubber, and other specialties gained. Manufactured fibers, coatings, agricultural chemicals and consumer products declined. Compared to a year ago, production was off 4.6% Y/Y. Chemical capacity utilization was stable at 71.5%. A year ago, capacity utilization was at 78.6%. The report suggests that the recovery may be slowing.
Chemical prices rose 1.1% in September, the fourth and largest gain since the lockdowns eased. Feedstock prices rose 2.3%. Chemical prices firmed across nearly all categories, with the largest gains in bulk petrochemicals, plastic resins, and synthetic rubber. Prices for manufactured fibers and other specialty chemicals were lower, however. Compared to a year ago, chemical prices remained off by 1.9% Y/Y, an improving comparison. Chemical import prices also rose, by 0.7% in September, the fourth and largest consecutive gain. Prices for chemical exports also rose, by 1.3%. Compared to a year ago chemical import prices were off by 3.2% while prices for chemical exports were down 2.4% Y/Y.
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17 October (8:00 am – 5:00 pm CDT)
The Association of Industry Analytics (AIA)
“The Role of Private Equity and the Chemical Industry” Webinar
Scott Wolff – Managing Director, American Securities
21 October (1:00 – 2:00 pm)
Société de Chimie Industrielle
Excel Business Analysis with Power Query (online)
24 October (9:00 am CDT)
The Association of Industry Analytics (AIA)
“Technology to Reopen the World + 2021 Economic & Policy Scenarios”
Duane Dickson, (moderator), Vice Chairman and Principal in Deloitte Consulting LLP’s Energy Resources &
Industrials Group; Shahira Knight, Deputy Managing Principal in Deloitte Services Policy & Government
Relations Group; Joachim Kohn, Rutgers University Board of Governors Professor of Chemistry; and Kevin Swift, Chief Economist at the American Chemistry Council
Chemical Marketing & Economics Group
29 October 2020 (1:00-2:00 Webinar)
New York, NY
Intro to Python Workshop (online)
12 December (9:00 am CDT)
The Association of Industry Analytics (AIA)
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.