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Blog Home   |   Economic Trends

 

Blog Home   |   Economic Trends

Weekly Chemistry and Economic Trends (October 9, 2020)


to 16.32 million unit paceup 0.9 point to 57.84.1%
Light Vehicle Sales NMIChemical Wholesale Trade

MACROECONOMY & END-USE MARKETS

Running tab of macro indicators: 16 out of 20

Macro Table

The number of new jobless claims fell by 9,000 to a disappointing 840,000 during the week ending 3 October, continuing within a 60,000 range during the last five weeks. Continuing claims fell by 1.003 million to 10.976 million and the unemployment rate for the week decreased 0.7 percentage points to 7.5%.

Light Vehicle Sales

Light vehicle sales came in at 16.34 million unit pace in September, well in excess of expectations. Sales rose across vehicle types but were especially strong among pick-up trucks and SUVs. That said, the industry faces considerable headwinds.

ISM Manufacturing and non Manufacturing Indices

The ISM Nonmanufacturing Index (NMI), which covers the largely services sector, rose for the fourth month in October, up 0.9 points to 57.8. Sixteen of the 17 industries covered reported growth; the only industry reporting a decline was Professional, Scientific & Technical Services. Several comments highlighted the strong market for construction materials, however challenges remain from Covid-related supply constraints.

Wholesale trade also rose for a fourth month, by 1.4%. With the exception of chemicals, electrical equipment, and hardware, all industries posted gains. The largest gains were in farm products, computer equipment, and lumber. Inventories also edged higher by a slightly lower-than-expected 0.4%, following three months of declines. As a result, the inventories-to-sales ratio edged down from 1.32 to 1.31. A year ago, the ratio was 1.35. Inventories have largely returned to a relatively balanced position which bodes well for production increases to meet future demand.

While U.S. goods and services exports rose 2.2% in August to $172 billion, the monthly gain is a deceleration from an 8.3% gain in July and 9.6% gain in June. Exports remain off 18.3% Y/Y. Over March-August, nearly $300 billion in U.S. export sales have been lost (based on a comparison to the same period in 2019). The August gain was driven by industrial supplies and materials, soybeans, and some smaller gains in business services, transport, and charges for the use of intellectual property. Exports of semiconductors were down as were travel services. U.S. imports of goods and services were up 3.2% in August to $239 billion, a level off 8.5% Y/Y. The August gain in imports was driven by pharmaceutical preparations, crude oil and cars. The U.S. trade deficit widened $3.7 billion to $67 billion in August, the largest in 14 years.

Global semiconductor sales rose by 3.6% in August with gains across all regions. The largest gains were in Asia Pacific (excluding Japan & China) and Europe. In the Americas, sales were up 2.6%. Compared to a year ago, sales were up 4.9%, the seventh consecutive month of Y/Y increases. Sales in the Americas were up 23.6% Y/Y.

Consumer debt unexpectedly eased 0.2% ($7.2 billion) to $4.145 trillion at the end of August. This comes after two monthly gains, which had begun to reverse the large decline in the 1st and 2nd quarters. Revolving credit (e.g., credit card debt) fell for a sixth consecutive month, by 0.9% in August while non-revolving credit (car loans, student loans, etc.) rose a nominal 0.1% during the month. Consumer debt was up 0.4% Y/Y while disposable personal income was up 5.4% Y/Y. Consumer spending was off 2.1% Y/Y.

ENERGY

Energy

The rig count rose by five to 263 rigs during the week ending 3 October. Oil prices moved higher on optimism over renewed talks for additional economic stimulus. Natural gas prices rose on shut-in GOM production, in addition to a lower-than-expected build. As of Thursday, the anticipated arrival of Hurricane Delta has prompted the shut in of 92% of GOM oil and 62% of natural gas production.

CHEMICALS

For the business of chemistry, the indicators still bring to mind a green banner for basic and specialty chemicals.

Chemical Table

According to data released by the Association of American Railroads, chemical railcar loadings, the best ‘real time’ indicator of chemical industry activity, rose by 4.3% to 31,377 railcars the week ending 3 October (week 40). Loadings were down 3.8% Y/Y and down 5.1% YTD/YTD. Loadings have been on the rise for 8 of the last 13 weeks. The 13-week moving average, which is used to smooth out volatility, was down 5.3%, another consecutive week of improving comparisons, indicating a slow recovery to railcar loadings.

The U.S. Geological Survey reported that monthly production of soda ash in July was 718 thousand tons, up 31.3% compared to a downwardly-revised June and down 9.9% YTD/YTD. Stocks fell dramatically from 454 at the end of June to 239 at the end of July (down 47.4%), but still a 10-day supply. Ending stocks were down 2.8% Y/Y.

Chemical Trade

U.S. chemical exports rose by 6% in August to $10 billion, a level off about 16% Y/Y. The August gain was driven by exports of bulk petrochemicals and intermediates and plastic resins. Plastic resins represent about a quarter of all U.S. chemical exports. Year-over-year comparisons remain off significantly across all sectors of chemical exports. U.S. chemical imports declined by 4% in August reflecting lower imports of agricultural chemicals and inorganics amongst other categories. Chemical imports are down 9% Y/Y. As a result of the decline in imports and gain in exports, the U.S. trade surplus in chemicals grew to $965 million to $2.3 billion in August.

Chemical Supply Chain

Following gains the previous three months, chemical wholesale trade fell 4.1% in August, one of only three major industries to post a decline. Disruptions from hurricanes along the Gulf Coast during August could have contributed. Inventories of chemicals rose 1.8% during the month, following declines the previous two months. As a result, the inventories-to-sales ratio rose sharply from 1.23 in July to 1.31 in August. A year ago, the ratio was 1.18. Compared to a year ago, chemical wholesale trade was off 2.3% while inventories were off 5.2% Y/Y.


For More Information

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

Upcoming Events of Interest

Tableau Training (online)
10 October (8:00 am – 5:00 pm CDT)
The Association of Industry Analytics (AIA)
www.aia-global.org

PowerBI (online)
17 October (8:00 am – 5:00 pm CDT)
The Association of Industry Analytics (AIA)
www.aia-global.org

“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
www.societe.org

Excel Business Analysis with Power Query (online)
24 October (9:00 am CDT)
The Association of Industry Analytics (AIA)
www.aia-global.org

“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
https://cme-stem.org/

Intro to Python Workshop (online)
12 December (9:00 am CDT)
The Association of Industry Analytics (AIA)
www.aia-global.org


Note On the Color Codes

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.

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